Skip to Content

Filter by:

Washington Highlights

Congress Reaches Agreement on SGR Repeal and Replacement Policy

February 7, 2014—AAMC President and CEO Darrell G. Kirch, M.D., issued a Feb. 6 statement commending the House and Senate for working together to combine the various Medicare physician payment reform and sustainable growth rate formula (SGR) repeal proposals.

In the statement, Dr. Kirch applauds the committees’ work, calling the effort a “significant step forward,” and offers gratitude for their “willingness to provide stable and predictable payment updates for the nation’s physicians.”

Additionally, he urges Congress to continue their bipartisan work and address the physician shortage stating, “Congress must lift the cap on Medicare support for graduate medical education and residency training positions to ensure that all Americans have access to the care they need.”

The Senate Finance, House Ways and Means, and House Energy and Commerce committees announced Feb. 6 they reached an agreement  combining multiple Medicare physician payment reform proposals into one bipartisan bill titled SGR Repeal and Medicare Provider Payment Modernization Act of 2014 (H.R. 4015, S. 2000 )[see Washington Highlights, Dec. 13, 2013].

The legislation would repeal the SGR formula, move Medicare physician payment towards a system that rewards quality and value over quantity of services, and incentivize physicians to participate in alternative payment models (APMS).

The agreement also includes five years of 0.5 percent payment updates as physicians transition toward new payment models.  Incorporating five years of positive updates was a compromise between the Senate Finance Committee’s bill, which had a 10-year payment freeze, and House versions, which called for three to ten years of positive updates.

The legislation creates the Merit-Based Incentive Payment System (MIPS), a new quality program that combines the penalties from three existing quality programs: the Physician Quality Reporting System (PQRS), Value-Based Modifier (VBM), and Electronic Health Record Meaningful Use (EHR MU) programs.

Beginning in 2018, the MIPS would assess performance in four categories including quality, resource use, meaningful use, and clinical practice improvement activities. MIPS was redesigned so that all physicians that perform well can receive an incentive payment. The amount at risk in the MIPS program starts at 4 percent in 2018 and increases to 9 percent in 2021.

In addition to the five-year period of stable payment updates and opportunity for positive adjustments, physicians could receive a 5 percent bonus if at least 25 percent of their Medicare revenue is received through an APM or patient-centered medical home in 2018 and 2019. The policy also establishes a technical advisory committee (TAC) to review and recommend physician-developed APMs to encourage more providers to participate in new APMs.

While the agreement marks significant progress in physician payment reform, the bill’s outlook remains questionable.  Within hours of introduction, Senate Finance Committee Chair Max Baucus (D-Mont.) was confirmed as U.S. Ambassador to China and incoming chair Ron Wyden (D-Ore.) has not indicated when or if the committee will take up the legislation.

The bill also fails to address Medicare extenders policy and payment offsets.  Should Congress fail to act, physicians face an approximately 24 percent cut on April 1, 2014.


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


envelope on a green background

Subscribe to Washington Highlights

RSS icon

Subscribe to RSS

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

Past Issues

For More Information

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