How the SGR repeal law supports new payment models


The legislation that repealed the sustainable growth rate (SGR) formula includes financial support for physicians who want to participate in new care delivery and payment models. Learn about this opportunity.

The Medicare Access and CHIP Reauthorization Act (MACRA), the law that eliminated the SGR, has a variety of provisions, including support for physicians who choose to transition to alternative payment models. This is the fourth post in a series that examines what physicians need to know about MACRA.

Beginning in 2019, physicians have two paths for Medicare payments:

  • Fee-for-service model. Physicians can continue to offer care within this model, just as they are now. This payment model will be governed by the new merit-based incentive payment system (MIPS).
  • Alternative payment models. Physicians who develop and participate in new models of care will receive bonus payments of 5 percent from 2019 to 2024.

Under the alternative model option, physicians will be subject only to quality reporting requirements for their specific payment model—they will not be subject to the MIPS. The 5 percent annual bonus is intended to help cushion physicians’ finances since the new models will require them to assume a certain amount of downside financial risk. The one payment model that will not require downside financial risk is the patient-centered medical home.

Physicians’ proposals for new models will be considered by a new advisory panel. The secretary of the U.S. Department of Health and Human Services (HHS) will establish criteria for this panel by Nov. 1, 2016.

MACRA also requires the secretary of HHS to submit a study to Congress on the feasibility of integrating alternative payment models into Medicare Advantage by July 1, 2016.

Additionally, the MACRA authorizes coverage for telehealth services that are provided in alternative payment models, even if those services aren’t otherwise covered by the traditional Medicare program.

What physicians can do now

Physicians reported that they want to move to new payment models but need help managing and responding to the many quality programs and metrics from payers to ensure their long-term sustainability, according to a recent AMA study conducted with the RAND Corporation. The provisions for alternative payment models in the MACRA were created to offer that assistance.

The AMA has been working to support physician-designed alternative payment models, focusing on identifying and developing models so that physicians in each specialty—whether they are independent or employed—have at least one model in which they could feasibly participate. 

Find resources for and additional information about alternative payment models on the AMA website.