Why is ICD-10 Implementation Tied to the Sustainable Growth Rate?

About 10 months ago, ICD-10 implementation was delayed because it was linked to the Protecting Access to Medicare Act of 2014, which was a short term-delay to the Medicare physician pay cut. Congress must decide whether or not to delay ICD-10 implementation for another year by April 1, 2015, or the proposed conversion factor of $28.2239 will be in effect. The approval of this conversion factor will result in a 21.2% reimbursement decrease, compared to the previous year, from April 2015 to December 2015.

Congress created the sustainable growth rate (SGR) in 1997 to help control federal spending by restraining the growth of Medicare reimbursements to physicians. It seems to be a general consensus that the SGR needs to be eliminated, but little is decided on a proper replacement for the model. On January 21, the U.S. House of Representatives Energy and Commerce Subcommittee on Health held a meeting titled "A Permanent Solution to the SGR: The Time is Now." The objective of the meeting was to develop an alternative method for the SGR that may reduce the $140 billion that the SGR costs the government annually.

One solution was suggested by Richard Umbdenstock, president and CEO of the American Hospital Association, to combine Medicare Parts A and B with a unified deductible and coinsurance. This would replace the current cost-sharing for acute-care coverage (Part A) and physician and outpatient services (Part B). Fundamentally, this would create a single, combined annual deductible covering all services in Parts A and B of Medicare. It would also implement a coinsurance rate of 20% for amounts above that deductible (including inpatient expenses), and an annual cap on each enrollee's total cost-sharing liabilities.

Summary by MedicalGroups.com

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