House Approves SGR Deal With Major Health IT Provisions

March 27, 2015 in News

On Thursday, the House approved legislation (HR 2) that would permanently replace the Medicare sustainable growth rate formula and could bolster the use of health IT, Modern Healthcare reports (Tahir, Modern Healthcare, 3/27).

The House voted 392-37 to pass the measure (Steinhauer/Pear, New York Times, 3/26). However, Senate Republican and Democratic leaders early Friday said that they would not consider the measure until they return from recess on April 13 (Lawder, Reuters, 3/27).


Congress last year approved a short-term delay to scheduled reductions to Medicare physician reimbursement rates called for by the SGR. Providers face about a 21% reduction in Medicare reimbursement rates unless Congress acts by April 1, 2015.

House and Senate lawmakers introduced the bipartisan, bicameral legislation to permanently replace the SGR last week (iHealthBeat, 3/20).

Among other provisions, HR 2 would:

  • Provide a 0.5% annual raise through 2019 for providers who participate in Medicare before transitioning to an incentive-based payment system; and
  • Encourage providers to participate in alternative payment models focused on patient outcomes, with providers participating in qualifying models receiving a 1% annual rate increase beginning in 2026 (Hughes, Wall Street Journal, 3/19).

 Meanwhile, the legislation includes several health IT provisions.

Meaningful Use Provisions

The measure would replace the SGR with a merit-based incentive payment system that would consolidate several federal incentive programs — including the meaningful use program, physician quality reporting system and value-based modifiers — into one value-based payment reporting system.

Under the 2009 economic stimulus package, providers who demonstrate meaningful use of certified electronic health records can qualify for Medicaid and Medicare incentive payments.

Specifically, the bill would:

  • Make eligible professionals who meet the program criteria eligible for a bonus (iHealthBeat, 3/20); and
  • Sunset existing meaningful use penalties and replace them with payment adjustments ranging from a 4% maximum penalty or bonus in 2019 to a 9% maximum in 2022 and thereafter.

According to Modern Healthcare, physicians who receive a large amount of their revenue from alternative payment models would be exempt from the merit-based incentive payment system (Modern Healthcare, 3/27).

In addition, the bill would:

  • Require eligible professionals to demonstrate that they have not “knowingly and willfully taken action … to limit or restrict the compatibility or interoperability of the certified EHR technology”; and
  • Encourage medical professionals to use EHRs even if they are not eligible for the meaningful use program via incentives, such as streamlined reporting of quality metrics.

Interoperability Provisions

The legislation also would mandate that HHS work with stakeholders to develop measures to quantify interoperability by July 2016.

Further, the bill would “declar[e] it a national objective to achieve widespread exchange of health information through interoperable EHR technology nationwide by December 31, 2018.” If widespread interoperability is not achieved by the end of 2018, HHS would be required to report to Congress by the end of 2019 on the barriers to achieving the objectives and related recommendations (iHealthBeat, 3/20).

Such actions would include examining the plausibility of creating a program to help providers compare and selected certified EHR systems (Goedert, Health Data Management, 3/26).

Other Health IT Provisions, Omissions

The bill also would:

  • Clarify that Medicare is able to pay for telehealth services in alternative payment models; and
  • Incentivize telehealth services and remote patient monitoring by including them as clinical practice improvement activities (iHealthBeat, 3/20).

However, the bill does not include language to delay the ICD-10 deadline, Health Data Management reports.

U.S. health care organizations are working to transition from ICD-9 to ICD-10 code sets to accommodate codes for new diseases and procedures by Oct. 1 (Health Data Management, 3/26).


The Healthcare Information and Management Systems Society in a statement said that the House’s approval of the bill is “a step forward in leveraging health IT to support quality improvement and patient engagement.” HIMSS added, “The SGR repeal highlights the opportunity we have this year to make great strides to advance interoperable systems [and] ensure quality improvements are achieved that are good for the patient, provider and overall system transformation” (HIMSS release, 3/26)

Meanwhile, Joel White, executive director of Health IT Now, in a statement said the group was encouraged by a provision related to advancing interoperability. White said, “This is a great step forward for the application of technology and data in improving health care” (Health IT Now release, 3/26).

However, other stakeholders were less optimistic.

Jeff Smith, vice president of public policy for the College of Healthcare Information Management Executives, said he is a “bit more conservative in his assessment.” He said, “I would say that the legislation creates the possibility of driving the adoption of health IT tools beyond what (meaningful use) requires,” noting that much depends on how HHS defines the formula.

Meanwhile, Saurabh Singh, an analyst for Morgan Stanley, said, “I am sure it is an incremental positive for the industry, but I just don’t see it as the same magnitude of opportunity that [the] HITECH [Act] enabled” (Modern Healthcare, 3/27).

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