Latest News on SGR Vote and ICD-10

On Thursday, March 26, the House voted to pass a permanent fix for Medicare’s sustainable growth rate (SGR). Known commonly as the “doc fix”, the bill passed 392-37 and completely gets rid of the flawed SGR and its pending 21% Medicare rate cut.

Each year around this time, the SGR is set to go into effect and each year Congress delays the cut but doesn’t fix the larger problem. This year Republicans and Democrats surprised everyone by announcing that they had reached an agreement for a long-term fix. The legislation provides an annual .5% increase for providers for the next four years with payments holding for the next six years after that.

The “doc fix” bill also sets up a new two-tiered payment system that provides incentives for doctors to shift to value-based payment programs. According to Modern Healthcare, House Minority Leader Nancy Pelosi called the bill “transformative in how it rewards the value not the volume” Thursday morning while speaking to the House.

After passing the House, the bill was sent to the Senate for a vote. It arrived just days before the spring recess, and the Senate opted to postpone the vote until they return, which is April 13. As a result, the 21% SGR cut will technically go into effect on April 1. However, all indications suggest Medicare will like wait to process claims until after the Senate votes.

“I think it is very unlikely that Medicare would process any claims on the reduced rate knowing that the probability that the bill will pass is at 79% (based on projections by govtrack.us),” said Rico Lopez, Principal Market Advisor at Kareo. “What Medicare has done historically in these situations is hold the claims with dates of service impacted, pending the outcome of the Senate vote. If voting is delayed and CMS fails to adjudicate by the processing deadline, then interest payments will be included in the reimbursements.”

There will be an impact on provider revenue explains Lopez. “Since this could potentially delay payments at a minimum of a week (past the mandated 14 calendar days for clean claims submitted electronically) and as much as three weeks (based on historical behavior by Medicare), there will be an impact on revenue,” he said. “Providers with high volume of Medicare patients should do their best to plan for this, especially since we don’t have an exact date for the vote, the President still need to sign the bill, and CMS will require time to update their reimbursement fee schedules.”

CMS did something similar late last year/early this year when they discovered a technical error in payment calculation. Rather than pay incorrectly and then have to make adjustments later on reimbursements already paid, they just held it until they were able to fix the fee schedules. It took about three weeks. The problem was discovered in late December and payments were held until January 14.

In other news, the SGR bill doesn’t contain an extension for ICD-10 and leaves the October 1, 2015 deadline in place.
For this to change, the Senate would have to make changes to the existing bill or vote on an alternative version and then send it back to the house. Based on recent comments for Senators, this seems unlikely.

“I think practices should assume at this point that ICD-10 is a go and get going with preparations if they have not already,” Lopez says. “We’re at the six month mark. Providers will need all this time to improve documentation, do code mapping of common codes, get staff trained, and set aside sufficient cash reserves.”

For a help in planning for the transition, download the ICD-10 Success Plan checklist.