Sustaining the unsustainable…

Since 1997, Medicare physician reimbursements have been set by a formula, called the sustainable growth rate (SGR). But after nearly 15 years wrought with high drama and brinksmanship, the formula has proven to be anything but sustainable, leaving physicians uncertain and patients wondering if they’ll have access to the health care they need.

Designed to track both with health-care costs and the overall economy, the concept behind the SGR formula became problematic in 2001, when health care costs first outpaced economic growth; the next year, physicians saw a cut in their reimbursements. However, that was the first and last time Congress allowed the cut to occur as scheduled. 

“Patching” the SGR has become an annual exercise in Congress, and with each “patch,” the potential cuts facing physicians continue to grow.  The most recent scheduled cut, on March 1, was to have been 27.4 percent. With that deadline bearing down on them, a bipartisan group of 20 lawmakers was given the opportunity to fix the SGR formula. And for the first time in years, there was hope for a permanent solution. 

This congressional panel considered repealing the SGR.  At a cost of $350 billion dollars, a viable offset was the money being saved as the wars in Iraq and Afghanistan wind down. (The cost of repeal grows as Congress ignores this issue, and there are few opportunities to find viable offsets.) Despite bipartisan support to use the fund, the committee, and ultimately Congress, punted on this issue yet again.

Instead of ending this exercise in false budgeting, Congress passed yet another temporary fix, this one a 10-month patch that will expire January 1, 2013 when physicians will face a 32 percent cut in Medicare reimbursement.   A lame-duck session of Congress will be tasked with addressing this issue again: the needed offset will only grow exponentially larger, as will public skepticism. 

The physician community has been advocating for a repeal of the formula, followed by a period of stable payments as new payment models are considered.  MedPAC released a plan for repeal that would reduce specialists’ payments over a period of time, while payments to primary care providers remain stable; the reimbursement decreases helping to offset the cost of repeal.  Congress should look hard at both of these proposals before the end of the year. 

However, patients must also lend their voice to this debate.  While Medicare patient access to physicians has not been seriously affected to date, a 32 percent cut in reimbursement most likely will cause physicians to consider withdrawing from the Medicare program.  The impact on patient access to care could be disastrous. 

Erika Miller
Vice President & Counsel

Lisa Ellington

Big Thinkery, LLC, 1011 Kenilworth Court Northwest, Concord, NC, 28027