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House Committees Release More Details on SGR Repeal and Replace Legislation

April 5, 2013—The House Energy and Commerce and Ways and Means Committees April 3 released a more detailed framework examining how Congress could repeal and replace the Medicare sustainable growth rate (SGR) formula based on feedback provided by stakeholders, including the AAMC [see Washington Highlights, March 1]. According to the committees’ press release, the updated three-phase replacement plan “provides further clarity…to repeal the SGR and reward providers for high quality and efficient care in the fee-for-service (FFS) program, while allowing providers to actively participate in payment and delivery reform.”

Based on stakeholder feedback, the updated proposal includes:

  • Bonuses to physicians for performing “clinical improvement activities,” as an additional means to reward good performance;
  • Processes for determining quality and efficiency measures that focus on evidence while being flexible and specialty-specific, with registries to standardize measures and improve risk-adjustment;
  • Timely performance feedback to providers to improve opportunities to optimize incentive payments; and
  • Risk-adjusting performance on quality and efficiency measures.

Under the bonus payment proposal, providers could receive a variable, performance-based credit in one of three ways:

  • Score on quality measures relative to their peers;

  • Significant improvement in their own quality score from the previous year; or

  • Executing clinical improvement activities.

The updated plan also specified that quality measures are to be risk-adjusted as to the severity of illness so that providers are not penalized for treating sicker or more complicated patients — a point AAMC emphasized in its comment letter to the committees.

The committees’ framework still is not complete. It includes a series of questions to be answered by the provider community by April 15, including:

  • How should the Secretary of Health and Human Services address specialties that have not established sufficient quality measures;

  • Should payments be based only on efficiency for providers that meet a minimum quality threshold; and

  • How long will it take to devise a way to determine efficient use of health care resources?


Len Marquez
Director, Government Relations
Telephone: 202-862-6281


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806