An agreement has finally been reached in both houses of Congress that replaces the Medicare physician sustainable growth rate formula, or SGR, with plan that provides stable funding updates based pay-for-performance and increases reimbursements by 0.5 percent annually for the next five years. The SGR, part of the 1997 Balanced Budget amendment, essentially ensured that the yearly increase in the expense per Medicare beneficiary does not exceed the growth in GDP.
However, as health care costs began to outpace inflation, the SGR began to fall short of the actual cost of health care services and Congress has repeatedly stepped in to suspend or adjust the payments (“doc fix”). Many physicians groups, including the AMA, have called for a more permanent, less formulaic, solution.
“We have a real opportunity to repeal the SGR once and for all to provide seniors, and the doctors who care for them, some much-needed certainty. This legislation today provides stability for physicians so they will no longer face the uncertainty of massive cuts, but also begins the process of improving how we pay for medical care to focus on positive results for seniors. The time to act is now and provide a permanent solution for the Medicare program millions of seniors rely on.” House Ways and Means Committee Chair Dave Camp (R-Mich.) said in a statement.
Senate Finance Committee Chairman Max Baucus (D-Mont.) said “Congress has spent a decade lurching from one ‘doc fix’ to the next, creating a new, unnecessary threat to seniors’ care each time. Enough is enough. This proposal would bring that cycle to an end and fix the broken system. Our bill makes Medicare’s physician payments more modern and efficient, and it will protect seniors’ access to their doctors.”
However, the bill does not specify just how to pay for these changes. According to an article in The Hill, these changes will cost from $120 billion to $150 billion. Payment has been a major sticking point in obtaining a bipartisan, bicameral agreement. There’s also concern among some supporters on how “quality” is defined.
Elder advocate groups, including AARP, support the changes, but urge Congress “to seek responsible options, many of which AARP has previously recommended. Since Medicare beneficiaries already pay for a portion of the annual provider payment increases through their Part B premiums, we ask Congress to reject proposals that unfairly ask America’s seniors to pay more by offsetting the cost of this policy fix on the backs of seniors,” said Joyce Rogers, senior vice president, government affairs.
According to the Brookings Institute, the shift to “value over volume” payment makes sense, and works in small scale pilot projects, but it’s not unclear whether it can work on a national scale.
Without Congressional action, physicians were facing a 24 percent cut, which would have become effective on April 1.
A one-page fact sheet on the bill is available here.