Congress has done it again. A bill was sent to the House on March 27, 2014, with the intent of correcting the Sustainable Growth R ate (SGR) reductions in the Medicare fee schedule. The proposed legislation was included as a last-minute addition, and sought to postpone the implementation date of ICD-10 to October 1, 2015.

In an eleventh-hour voice vote, this bill was passed and sent up to the Senate, who subsequently approved the bill four days later. Incidentally, the vote was handed down the same date as the final day of the current extension of SGR. At first glance this may look like happy news, but understanding the ramifications of this bill may be a little more in depth than first glances reveal.

At first glance this may look like happy news, but understanding the ramifications of this bill may be a little more in depth than first glances reveal.

Medicare’s SGR is a method currently used by CMS to control spending in the Medicare program. This was enacted in the Balanced Budget Act of 1997. The SGR formula is based on target spending. If spending for the previous year exceeded the target budget, then the conversion factor will decrease payments for the next year. If spending was less than expected, the conversion factor would increase payments for the next year.

Congress can vote to suspend the decrease, and has done so each year. As a result, the current percentage in the conversion factor reflects a potential cut of over 24 percent in the 2014 fee schedule. This is truly a staggering amount.

In 2014, the House of Representatives introduced a SGR Repeal act with the intention of replacing the SGR. The purpose was to permanently fix the shortfalls in the current system. Unfortunately, as with many initiatives in Washington today, Congress was unable to come up with a way to pay for the bill. A “patch” that delays the current cuts for one year was then proposed. This is the seventeenth time in 11 years that a delay in the SGR cuts has been proposed. Although there was strident opposition to the patch, it was passed with a voice vote of 64 to 35. Of note is that the vote was taken without roll call, no votes were tallied, and the majority of representatives were out on a recess. This bill was then sent to the Senate.

Added to the patch was a last-minute addition to delay ICD-10 for another year, with a new implementation date of October 1, 2015. It is widely believed that this was inserted to placate physicians who were opposed to the SGR patch.

A last-minute delay of this nature has been extremely costly to the healthcare industry, both in time and money. This also creates confusion at the federal level, and among coding professionals and practice administrators. The industry is looking to CMS for guidance on a new implementation guideline and needs steps to proceed. (As of the writing of this article, CMS has not been forthcoming with any new information).

It is estimated that this deferment will cost the industry an additional $1 billion to $6.6 billion. It affects every level in the industry, including clearinghouses, software vendors, hospitals, practices, insurance companies and coders. All of these entities have expended time and monetary resources in preparation for the 2014 deadline. Many coding education programs had stopped teaching ICD-9, and recent graduates are only trained in ICD-10. Transition to the new code set, including the cost of expensive EHR technology, had begun on many levels.

The United States is one of the only developed countries that has not transferred to the new code set. This postponement sets us behind even further. Groups like AHIMA, the AMA and the AAPC will continue to work with the industry so that providers are supported during the next year, and to prevent another costly delay of this type. It is a shame that Congress added a special interest agenda into a piece of legislation that was supposed to correct vital physician payment issues.