February 2, 2015

Will ICD-10 Implementation be Tied to the Sustainable Growth Rate Once Again?


About 10 months have passed since ICD-10 implementation was delayed for another year, but the possibility for yet another delay still looms.

ICD-10 implementation was delayed because it was tied to the “one-year doc fix,” otherwise known as the Protecting Access to Medicare Act of 2014 (PAMA). This legislation, which was passed by Congress and signed by President Obama on April 1, 2014, was a short-term delay to the Medicare physician pay cut.


Congress once again must act by April 1, 2015; otherwise, the proposed conversion factor (CF) of $28.2239 might go into effect. If the proposed CF scheduled from April to December 2015 is approved, this will mean a 21.2-percent reimbursement decrease compared to the 2014 calendar year.

The sustainable growth rate (SGR) was created in 1997 by Congress to curb federal spending by restraining the growth of Medicare’s reimbursements to physicians. Since 2002, Congress has passed the “doc fix” 17 times to prevent cuts to reimbursement for physicians.

Although Congress last year had made significant progress on a Medicare pay reform plan that would provide a permanent, bipartisan solution to the ongoing SGR cuts, the permanent fix stalled over disagreement and key questions about how to pay for SGR reform. Although there is agreement about the need to scrap the SGR, there is little consensus on a replacement. There is also widespread agreement that moving physicians to alternative payment models is the answer, but first a decision has to be made on what to do with the current Medicare physician fee schedule.

On Jan. 21, congressional members of the U.S. House of Representatives Energy and Commerce Subcommittee on Health kicked off a two-day meeting titled “A permanent Solution to the SGR: The Time is Now.” This meeting was set up to find a way to reform the SGR formula permanently, thereby offsetting the $140 billion the program costs the government annually.

The subcommittee has until March 31 to find a solution before the PAMA measure expires. This fix is not dependent on who controls the U.S. Senate, as this is kind of a non-partisan non-issue. However, the conundrum remains regarding how to pay for SGR reform in a manner that can pass both houses of Congress and be signed by the president. To this end, the subcommittee met with Richard Umbdenstock, president and chief executive officer of the American Hospital Association, on Jan. 22; Umbdenstock proposed combining Medicare Parts A and B with a unified deductible and coinsurance. This measure would replace the current cost-sharing structure for acute-care coverage (Part A) and physician and outpatient services (Part B). This would translate into a single, combined annual deductible covering all services in Parts A and B of Medicare. It would also mean a uniform coinsurance rate of 20 percent for amounts above that deductible, including inpatient expenses, and an annual cap on each enrollee’s total cost-sharing liabilities.

Again, the subcommittee has until March 31, which is when the current patch expires. So, once again we shall wait and see if ICD-10 will be incorporated into the new bill, possibly delaying implementation until 2017 (which would make many physicians happy, as evidenced in an excerpt from a letter dated November 2014 to House Speaker John Boehner from the medical society of the state of New York, the Texas Medical Association, and the National Physicians' Council for Healthcare Policy). The reasons cited were:

  • “The costs of the new ICD-10 coding and billing mandates scheduled for October of 2015 will force financial disruptions and chaos.”
  • “Patients will lose their doctors!” 

The letter went on to indicate that the “onerous penalties tied to these mandates add to the hysteria that is running through physicians’ offices and is generating many early retirements."




(To review Umbdenstock’s testimony online, go here: http://democrats.energycommerce.house.gov/sites/default/files/documents/Testimony-Umbdenstock-HE-SGR-2015-1-22.pdf)

(To review the letter online, go here:


For additional information on HR4015, go online here: http://democrats.energycommerce.house.gov/sites/default/files/documents/Section-by-Section-Summary-HR-4015-2014-2-6.pdf


Denise M. Nash, MD, CCS, CIM

Denise M. Nash, MD, CCS, CIM, serves as vice president of compliance and education for MiraMed Global Services and as such she handles all Compliance and Education needs including migration to ICD-10. She has more than 20 years experience in the healthcare industry. Dr. Nash has worked for CMS in hospital auditing and has expertise in negotiation and implementation of risk contracting for managed care plans. She has also worked with individuals as well as physician groups on utilization and PQRS management to improve financial performance for the risk-based contracts and value based purchasing (VPB) programs. Her past experience also included consulting for the Office of the Inspector General of New Hampshire in its Fraud and Abuse Division.