Suggestions for Repealing the SGR Rate
October 5, 2011 – Both Democrats and Republicans acknowledge that the Medicare physician payment system is broken and a permanent “fix” must be established. The problem, of course, is to come up with a plan to replace the SGR payment formula before the 29.5 percent payment reduction takes place on January 1, 2012. It is estimated that averting the currently scheduled cuts would cost nearly $300 billion over the next 10 years and if Congress again votes to apply a temporary fix, the cost could rise to $600 billion in five years.
Several recommendations to replace and pay for the SGR payment formula, including suggestions other than physician payment cuts, have been submitted to Congress, including those from the “gang of six,” the Simpson-Bowles commission and the Lieberman/Coburn proposal.
The latest proposal was offered on September 15, by the Medicare Payment Advisory Commission (MedPAC), an influential Congressional agency established to advise Congress on issues affecting the Medicare program. Their proposal would repeal the SGR payment formula only by means of physician payment cuts as follows:
- Freeze current Medicare payments to primary care physicians for 10 years, and
- Reduce Specialists’ Medicare payments by 5.9% for 3 straight years, followed by 7 years of no change.
Although most physician organizations support the repeal of the SGR formula or “doc-fix”, the MedPAC proposal does not sit well with many in the medical community. The AMA, along with 42 other physician groups, sent a letter to MedPAC on October 3, criticizing its plan because it “retains many of the SGR’s flaws, undermines physicians’ ability to participate in payment and delivery reforms, and calls for payment rates that the Commission itself has previously said could reduce Medicare beneficiaries’ access to care.”
They further went on to say that:
- MedPAC should examine a broader set of proposals, other than just physician cuts, to pay forSGRrepeal,
- MedPAC is asking for payment cuts when physicians are financially burdened by other enacted Medicare payment policies, such as adopting the massive new ICD-10 coding system, implementing EHR, eRx and PQRS; and to top it off, may receive penalties exceeding 5 percent a year for physicians who can not meet these implementation guidelines.
- There is no basis for the assumption made by the commission’s staff that aggregate physician payments under Medicare will continue to increase despite cuts in reimbursement for particular services.
- The U.S. is confronting a shortage of primary care physicians at a time when baby boomers are beginning to access the Medicare system and the “imposition of new Medicare cuts that may well spill over into other insurers will contribute to “serious across-the-board access problems.”
- Neither primary care physicians nor other physician specialists will have the positive operating margin needed to support other delivery innovations introduced byCMS, such as care coordination, chronic disease management, and quality improvement, which have been touted to improve patient care and lower Medicare costs.
The letter ended by stating physician groups want to work with MedPAC to develop an alternative to their proposal that would achieve its goal of “producing stable and predictable physician payment updates, protecting beneficiaries’ access to care and creating an environment that encourages payment and delivery reforms.”
MedPAC is scheduled to vote on their final proposal to Congress during its meeting tomorrow and Friday.
Physician Group Proposals: The HBMA (Healthcare Business Management Association) compiled the following comparisons of some of the SGR payment proposals made by the American Medical Association (AMA), the American Academy of Family Physicians (AAFP), and the American College of Physicians (ACP), as well as the MedPAC proposal. It is hoped that Congress will review and take into consideration these proposals, in addition to proposals from their congressional agencies and commissions, before making their final decision on the fate of future physician reimbursement.
HBMA’s Side-By-Side Analysis of SGR Fix Proposals
| Years Allotted for Stable Statutory Updates | Payment Rates for Primary Care | New Payment Models | Delivery System Reform | Low Value and Over-priced Services | ||||||
| Medpac | Permanently repeal the SGR formula; replace it with stable, predictable 10 year path of legislated fee-schedule updates; elimination of 30% cut on January 1, 2012; share cost of repeal across physicians, providers in other sectors, and beneficiaries | Reduce the fee schedule’s conversion factor for services other than primary care; freeze payment rates for primary care (both specialty and focused primary care); cut conversion factor for physician specialist services by 5.9% each year for 3 years to be followed by a freeze for 7 years | Align payment policies for fee-schedule services with incentives for improved quality and prudent resource use; base Relative Value Units on efficient practices; validate and adjust RVUs (PPACA requirement); use data from Electronic Health Records, patient scheduling, and billing systems | Shift Medicare policies away from Fee for Service; new models such as ACOs, bundled payments, and shared savings programs should improve accountability for efficient use or resources and care quality; beneficiary incentives must be aligned with objectives for great accountability also | Accelerate the time consuming current review process on misvalued services; achieved annual number goal (e.g., 1.0%) for reducing RVUs; budget neutral RVU changes would redistribute payments to under priced services | |||||
| AMA | Implement a five-year period of stable statutory updates in conjunction with repeal of SGR to allow time to develop and test pilot projects that would form the bases for a new Medicare physician payment system | Stable Medicare physician payments that keep pace with the growth in medical practice costs from 2012-2016; permanently repeal SGR (30% cut in January 2, 2012) | Generate new payment models that reward physicians and hospitals for high quality care and efficient use of resources. This includes models focused on Medicare shared savings, gainsharing, payment bundling across providers and episodes of care | Delivery systems that give physicians the ability to obtain and analyze large amounts of data on patient use and cost of services, the ability to share information with other physicians and providers at the point of care, and the ability to manage patient care in a coordinated way and experience managing risk | Create a model that gives physicians the ability to identify inappropriate utilization of services and reduce it, as well as knowledge of evidence-based practices that achieve good care outcomes | |||||
| Years Allotted for Stable Statutory Updates | Payment Rates for Primary Care | New Payment Models | Delivery System Reform | Low Value and Over-priced Services | ||||||
| AAFP | Specify a payment rate for the next 3-5 years to allow time for demonstration programs and alternative delivery models to compile enough data to determine the best fiscal and quality based payment methods; permanently repeal SGR | Strongly recommends that the payment rate stipulate at least a 3% higher rate for primary care physicians. Also, there should not be any cutbacks in GME payments for primary care education and training | Maintain the Geographic Practice Cost Indices (GPCI) and boost payment in Medically Underserved Areas. Finalize proposal to extend multiple procedure payment reduction (MPPR). Apply MPPR to technical component of all services | Continue to offer as many Physician Quality Reporting System options and timeframes as possible to facilitate successful participation by small to medium sized practices | Establish a more timely review of misvalued service; consolidate the formal five-year review of work and practice expense with the annual review of potentially misvalued codes and services | |||||
| ACP | Stabilize payments and allow for broad testing of payment models over the next five years, after which physicians would transition to the models shown to be most effective and efficient in achieving high-quality care and patient-centered outcomes; permanently repeal SGR | Set the annual update for primary care services at no less than 2% and no less than zero for other services; all payers be required to contribute to financing GME and weight the payments to primary care training programs | Establish new payment methods that incentivize clinicians, hospitals, and other providers to align themselves with value and provide the most cost-conscious and patient-centered care possible; establish methods that focus on efficiency and reduce care of no or marginal value | Transition to new delivery models for clinicians, hospitals, and other providers aligned with value; clinicians should be incentivized to provide high-value, cost-conscious care rather than rewarded for increasing the volume of services | Establish patient incentives and insurance designed to encourage high-value care and reduce use of low-value treatments and tests; reduce the costs of defensive medicine |
