Replacing the SGR: The latest developments in the ACS Value-Based Update proposal

In the August 2012 issue of the Bulletin, David B. Hoyt, MD, FACS, Executive Director of the American College of Surgeons (ACS), announced that the College was engaged in an effort to replace the flawed Medicare sustainable growth rate (SGR) formula, which is used to calculate physician payment, with a Value-Based Update (VBU). In his “Looking forward” column, Dr. Hoyt indicated that the ACS proposal would better reflect the real increasing costs of delivering health care in the U.S. and would begin to factor in the quality of care that physicians deliver based on measures that are meaningful to patients as well as to surgeons.

Since then, the ACS has continued its work to develop this proposal. Although many details still must be pinned down, policymakers in Washington, DC, are showing increasing interest in the concept of the VBU, and the ACS is working diligently to further define the structure of the VBU and provide more information to and obtain feedback from Fellows of the ACS.

ACS as a thought leader in payment reform

In July 2012, ACS leaders testified at two different congressional meetings dedicated to developing an alternative payment methodology to the SGR.

First, Frank G. Opelka, MD, FACS, Associate Medical Director of the ACS Division of Advocacy and Health Policy, represented the College at a July 11 Senate Finance Committee roundtable. The meeting, titled Medicare Physician Payments: Perspectives from Physicians, was an opportunity for members of Congress to hear the physician community’s suggestions on how best to reform the Medicare physician payment system and encourage health care providers to deliver high-quality, high-value health care. Representatives of four other health care organizations—the American Medical Association, American Academy of Family Physicians, American College of Cardiology, and American Society of Clinical Oncology—also participated in the roundtable. This meeting was the third in a series that the Senate Finance Committee has scheduled to examine the current state of the Medicare physician payment system.

Next, Dr. Hoyt spoke on Medicare payment reform during a July 18 House Energy and Commerce Health Subcommittee hearing, Using Innovation to Reform Medicare Physician Payment, which was convened to explore possible options for replacing the SGR. Witnesses and Representatives at the hearing strongly agreed that the SGR should be replaced. Dr. Hoyt shared the College’s experience with quality programs and discussed the framework of the College’s VBU. In addition, at press time, the College was scheduled to testify before the House Ways and Means Subcommittee on Health.

Through these and other activities, the ACS is ensuring that as Congress continues its march toward identifying a replacement for the SGR, the ACS will serve as a valued resource committed to improving the payment system to better reflect the care delivered and factors that are important to surgical patients.

Adding more meat to the bones

As the College looks to further develop the proposal, it is taking the critical step of conducting further research into and analysis of the possible permutations the VBU methodology could take and developing a model of what possible clinical quality measure groupings might look like under this potential plan. More specifically, the ACS has partnered with researchers from Brandeis University, Waltham, MA, and Brigham and Women’s Hospital, Boston, MA.

Through this venture, the ACS anticipates gaining a better understanding of how this methodology may be used to ensure that payment updates are more closely aligned with factors that surgeons can control rather than being anchored to the spending and resource use of all Medicare Part B providers. The ACS also seeks to bring further clarity to the quality and appropriateness of measures that would be selected for inclusion in the program, as well as the ability of participants to meet set performance thresholds on the measures both on a national level and a local level.

Time is of the essence

Needless to say, a substantial amount of thought and effort goes into designing a physician payment system that serves the best interests of all stakeholders, including patients, all types of physicians, and the government. However, as ACS Fellows can attest, all health care services continue to be delivered under the pressure of a broken Medicare payment system.

Although the more than 27 percent cut that was slated for January 1, 2013, was averted through congressional action—largely due to the advocacy efforts of the ACS and other medical and surgical organizations—other cuts are scheduled to occur in the near future. These potential reductions include the 2 percent cut in physician payments mandated under the federal budget sequester, as well as a 24 percent SGR-triggered Medicare physician payment cut effective January 1, 2014. With the stresses these factors place on surgeons across the nation, the ACS proceeds with a sense of cautious determination to replace the system that has served American medicine so poorly for so long.

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