Senate Must Take Action Before April 15 or Medicare Physicians will Face Deep Cuts
When Congress passed the Balanced Budget Act of 1997, the Sustainable Growth Rate (SGR) was introduced to help control Medicare costs to physicians and other outpatient providers for services provided (payment under Medicare Part B). The theory behind the SGR was to keep Medicare costs within a constant relationship to the federal budget by tying Medicare budgets to the Gross Domestic Product (GDP). However, almost every year that the SGR mandated a decrease in reimbursement, Congress enacted a “patch” to eliminate and often increase reimbursement for that year. The challenge today is that the SGR formula carries forward the mandated decreases, so the subsequent year now has an added burden.
This year, the SGR formula projects a 21% decrease in Medicare Part B payments that went into effect April 1, 2015. The House overwhelmingly passed a $200 billion bill (Medicare Access and CHIP Reauthorization Act of 2015) to permanently repeal the SGR on March 26, but the Senate refused to take up the bill until after their recess, which means the vote will not happen until at least April 13. The Centers for Medicare and Medicaid (CMS) indicated Medicare Physician Fee Schedule claims for services rendered on or before March 31, 2015, are unaffected by the payment cut and will be processed and paid under normal procedures and time frames. However, until action is taken by Congress, CMS must take steps to implement the negative update.
Under current law, electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt. The two week window allows CMS to hold off any payment cuts until absolutely necessary. If the SGR formula is not repealed or adjusted, CMS will be paying for appropriate claims at the reduced rate. If the SGR repeal occurs after that date, it is anticipated that CMS will retroactively repay claims at the higher rate.
If the Senate approves the bill prior to April 15, providers’ payments should not see any significant disruption. However, if the Senate does not approve the measure, physicians and other impacted providers need to consider the following:
- Time your Medicare bills appropriately. Even if CMS will apply a retroactive repayment, the time and resources needed to track those bills and resubmit them may be burdensome. Some providers have opted to delay billing for services until after the anticipated Senate approval allowing for one submission at the higher rate.
- Have appropriate cash reserves. If payments are reduced even temporarily, the impact on cash flow could be problematic for payroll and other operating expenses.
- Develop a strategic plan. Even though unlikely, if the SGR program is not fixed and the reduction is permanent, the development of a strategic plan to grow services and reduce costs will be essential.