Sustainable Growth Rate Repealed, MACRA Revealed: Historical Context and Analysis of Recent Changes in Medicare Physician Payment Methodologies.

Intended to provide long-term control of Medicare physician spending, the Sustainable Growth Rate (SGR) tied certain Medicare Part B payments to the economic performance of the United States. Although sensible in concept, the political implementation of the SGR resulted in a failed and perilous policy that challenged sensibilities and practice since its implementation in 1997. Few professions or businesses could function with the potential for an overnight diminution in compensation of doubledigit percentages, yet physicians have survived under this methodology for almost 2 decades. Given the payment structure of imaging centers, many radiology practices have been particularly vulnerable. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) eliminated this sword of Damocles of the SGR once and for all. However, by mandating the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APM), MACRA creates both challenges and opportunities for radiologists—and all other Medicare-participating health care professionals. For instance, by 2022, certain providers could experience adjustments in certain Medicare Part B payments by as much as 9% based on performance metrics collected in 2021: fluctuations comparable in magnitude to the envisioned SGR cuts. This Vignette describes the political and health care environment leading to the SGR repeal and describes, in detail, the new physician payment methodologies advanced under MACRA. INTRODUCTION AND FOCUSED HISTORY In 1997, the federal government enacted what, in retrospect, seems to have been a confusing policy: to assist balancing the federal budget by curtailing growth in professional-side medical spending. The Balanced Budget Act of 1997 introduced the SGR into Medicare payment policy. The SGR concept is not novel to the medical profession: It was derived from the business world, where it describes best-case-scenario growth. For example, an SGR may be used to define an expansion strategy for a given line of business based on preconceived plans, definitions, and limitations. Parts B and D of the Medicare program are financed from the Supplementary Medical Insurance Trust Fund. The Supplementary Medical Insurance is financed through fees paid by beneficiaries and federal dollars derived from taxation. Part B provides professional-component reimbursement to physicians and allied health professionals and the global fees to free-standing imaging centers. (Payment of the technical component of hospital-based imaging services is made through Medicare Part A and was not addressed by the SGR.) Targets set by the SGR were not direct limits on expenditures. Instead, the Medicare Fee Schedule Update is adjusted to reflect the comparison of actual expenditures with target expenditures. Thus, if service expenditures exceed the SGR target, the Medicare fee schedule update is reduced to meet the deficit, and vice versa. The SGR target is calculated on the basis of projected changes in 4 factors: 1) fees for physicians’ services, 2) the number of Medicare beneficiaries, 3) US gross domestic product, and 4) service expenditures based on changing law or regulations. Simply stated, the SGR formula tied growth in physician spending to the economic performance of the United States, theoretically preventing growth in Medicare physician spending from exceeding the annual growth in gross domestic product. The Centers for Medicare and Medicaid Services (CMS) used money spent between April 1, 1996, and March 31, 1997 ($48.9 billion dollars) as the basis for its calculation of future program goals. Since the 1970s, growth of health care expenditures has typiFrom the Department of Radiology (J.A.H., H.B.H., P.W.S.), Massachusetts General Hospital, Boston, Massachusetts; Harvard Medical School (J.A.H., H.B.H., P,W.S.), Boston, Massachusetts; Mecklenburg Radiology Associates P.A. (R.M.B.), Charlotte, North Carolina; Norwich Diagnostic Imaging Associates (W.D.D.), Norwich, Connecticut; Department of Radiology and Imaging Sciences (R.D.), Emory University, Atlanta, Georgia; Harvey L. Neiman Health Policy Institute (R.D.), Reston, Virginia; Hackensack University Medical Center (G.N.N.), Hackensack, New Jersey; Pain Management Center of Paducah (L.M.), Paducah, Kentucky; and Department of Anesthesiology and Perioperative Medicine (L.M.), University of Louisville, Louisville, Kentucky. Please address correspondence to H. Benjamin Harvey, MD, JD, Department of Radiology, Massachusetts General Hospital, 175 Cambridge St, Suite 200, Boston, MA 02114; e-mail: [email protected]