Senate Passes SGR Replacement Bill With Health IT Implications

April 15, 2015 in News

On Tuesday, the Senate voted 92-8 to approve legislation (HR 2) that would permanently replace Medicare’s sustainable growth rate formula and could improve the use of health IT, Politico‘s “Morning eHealth” reports (Allen et al., “Morning eHealth,” Politico, 4/15).


The House last month voted 392-37 to approve the bill.

Congress last year approved a short-term delay to scheduled reductions to Medicare physician reimbursement rates called for by the SGR. Under SGR, providers had been facing about a 21% reduction in Medicare reimbursement rates that was set to take effect this month.

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 0.75% annual rate increase beginning in 2026.

Health IT Provisions

Meanwhile, the legislation includes several health IT 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.

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.

The bill also would:

  • Clarify that Medicare is able to pay for telehealth services in alternative payment models (iHealthBeat, 3/27);
  • Expand Medicare claims data sharing under CMS’ Qualified Entity program (Thune release, 4/14);
  • Incentivize telehealth services and remote patient monitoring by including them as clinical practice improvement activities (iHealthBeat, 3/27);
  • Provide technical assistance to rural health care providers; and
  • Require the Government Accountability Office to study the benefits and barriers of remote patient monitoring and provide a report within two years of enactment (Thune release, 4/14).


In a release, Sen. John Thune (R-S.D.) touted several provisions he supported that aim to bolster the use of health IT. He said, “Rapid growth and changes in health care clearly indicate the need for reform, which is why I’m pleased the Senate acted … to improve quality and value for Medicare patients, while making important improvements for rural health care providers and beneficiaries.” He added, “These provisions will not only help to strengthen Medicare for future beneficiaries, but will also ensure that rural health care providers have access to the tools needed to provide the highest quality care” (Thune release, 4/14).

Joel White, executive director of Health IT Now, also praised the bill’s passage, noting, “There are several things about this bill that patients should be proud of. This legislation includes CMS data sharing, interoperability by a date certain, information blocking provisions, meaningful use incentive payment changes, and measures to advance telemedicine” (Health IT Now release, 4/14).

The Medical Group Management Association called the bill a “significant victory,” and highlighted provisions that would consolidate Medicare quality reporting programs (MGMA, 4/15).

However, some groups previously have been less optimistic about the bill.

Jeff Smith, vice president of public policy for the College of Healthcare Information Management Executives, has 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” (iHealthBeat, 3/27).

Next Steps

The bill now heads to President Obama for his consideration (Pear, New York Times, 4/14). Obama has indicated he will sign the measure, calling it “a milestone for physicians, and for the seniors and people with disabilities who rely on Medicare for their health care needs” (Levey, Los Angeles Times, 4/14).

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