• Provides background on the SGR Medicare payment
formula and the efforts that ultimately led to its repeal
• Describes payment options available to
surgeons under MACRA, including a new
Merit-Based Incentive Payment System
• Summarizes how the law will benefit surgeons
President Barack Obama signed legislation this pring that fulfilled one of the American College of Surgeons’ (ACS) foremost and longest running
legislative goals—reform of the Medicare physician
payment system, including permanent repeal of the
broken sustainable growth rate (SGR) formula. 1 The
SGR, first enacted as part of the 1997 Balanced Budget
Act, set unrealistic, aggregate spending targets in the
Medicare physician fee schedule. As a result, each year
since 2001, the Centers for Medicare & Medicaid Services (CMS) fee schedule mandated payment cuts for
surgeons and other physicians.
These projected cuts were largely averted through
annual (or sometimes more frequent) legislative patches
commonly referred to as temporary “doc fixes.” In
all, Congress enacted 17 temporary fixes, ranging in
duration from one month to two years, at a cost of
approximately $169.5 billion. 2 These last-minute patches
stopped the cuts but caused a great deal of uncertainty
for physicians because of the fixes’ transitory nature.
These short-term patches also made it more difficult
to pass permanent, meaningful reforms that would
incentivize the provision of high-quality care.
The recently enacted Medicare Access and Children’s
Health Insurance Program (CHIP) Reauthorization
Act (MACRA), Public Law No. 114-10, is the culmination of a multi-year effort by the physician community,
patients, and lawmakers to advocate for meaningful
reform and ensure ongoing access to care. The ACS
played an especially influential role in garnering lawmakers’ support.
Legislators appreciated the fact that the ACS’ efforts
went beyond calling for repeal and included the devel-
opment of an SGR replacement proposal, known as the
Value-Based Update (VBU). As a result, the College was
invited to testify before the three key congressional
committees with jurisdiction over the Medicare pro-
gram—the Senate Committee on Finance, the House
Committee on Energy and Commerce, and the House
Committee on Ways and Means—while Congress
developed the proposal in 2012 and 2013.3, 4 The ACS
remained active in negotiations on the finer points of
the law throughout the entire legislative process as
Congress sought to make meaningful improvements.
The law also includes a two-year extension of CHIP,
entitlement reforms, and other provisions, several of
which will affect surgeons.
Physician payment under MACRA
The new law takes a number of important steps to
improve the Medicare physician payment system. The
result of a bipartisan political compromise, the legislation was written with the goal of maintaining a
balance between restoring stability to Medicare physician payments and realigning incentives to better
facilitate physician-driven quality improvement efforts.
Perhaps the most significant change in the new law
is the immediate and permanent repeal of the SGR,
which had been a major goal of the College and the
larger physician community. According to an estimate
from the Congressional Budget Office (CBO), the cost of
simply repealing the SGR and freezing payment levels
for 10 years to put Medicare physician payments back
on level ground would have cost $137.4 billion. 5 This
new law does not freeze payments, however. Repeal is
followed by modest annual updates through 2019 in an
effort to provide physicians with a period of stability as
a new fee-for-service payment system is implemented.
During this time, new payment models also will be proposed and developed by specialty societies and other
interested parties. In addition, physicians will become
eligible for lump-sum incentive payments and additional updates in the future.
Early versions of the legislation did not include
updates and would have been roughly equivalent to a
10-year payment freeze; in 2013, however, the House
Committee on Ways and Means modified the bill to