Throughout 2011, the sustainable growth rate (SGR) issue continued to intensify. Stakeholders within the healthcare industry, in particular those groups representing physicians, lobbied Congress vigorously to “fix” the SGR permanently. Many hoped that the Joint Selection Committee on Deficit Reduction, the so-called supercommittee, would offer up a solution as it deliberated on how to reduce the federal deficit.
At the deadline for this publication, the supercommittee was still deadlocked, less than a week away from its budget reduction plan deadline, and many in the country believed that the committee would not be able to reach a federal deficit agreement never mind solve the SGR problem.
In the November issue of Healthcare Finance News, Henry Aaron, a healthcare expert and economics studies senior fellow at the Brookings Institute, a Washington, D.C.-based think tank, expressed the belief that the supercommittee would not be able to agree upon a deficit fix and that faced with another round of Medicare physician payment rate cuts – this time at 27.4 percent – Congress would institute another temporary fix.
“It just makes the problem larger next time around and that is not desirable, but we’re going to have an election in little over a year that may or may not decide some things, but whether it decides things or not, it’s a reason for putting off decisions until that event has occurred,” he said.
In a press release issued by the Centers for Medicare & Medicaid Services (CMS) announcing the Medicare physician payment fee for 2012, CMS Administrator Donald Berwick assured doctors that the Obama administration is committed to achieving an SGR fix.
In the Obama administration’s budget proposal released in September, no specific suggestions for fixing the SGR were offered but the proposal’s budget numbers assumed an SGR fix at an estimation of nearly $300 billion.
While the White House hasn’t offered any specific recommendations for a fix, a number of others have. In its “Health Policy Brief: Medicare Payments to Physicians,” released in November, Health Affairs laid out the fix options on the table. They include:
• The Medicare Payment Advisory Commission plan: MedPAC voted to recommend to Congress an SGR repeal that will cost approximately $200 billion over 10 years. To pay for it, MedPAC proposed a 10-year Medicare payment rate freeze to primary care physicians, cuts to payments for specialists followed by a payment freeze and other offsets.
• The Bowles-Simpson Commission plan: This plan suggested freezing physician payment rates through 2013, reducing rates by one percent in 2014 then reinstating the SGR in 2015 using the spending rate of 2014 as the baseline. The Congressional Budget Office estimated this plan would cost just over $250 billion.
Health Affairs’ policy brief also noted that others are advocating for long-range payment reform that may involve delivery system changes promoting integrated care and more cost-effective strategies.
“Why is it so hard (to come up with a fix)?” said Lynda Young, MD, Massachusetts Medical Society president. “It’s not as if other organizations haven’t offered their thoughts . . . and for whatever reasons, they just don’t do it.”