The Plea for Repeal of the Medicare Sustainable Growth Rate

doc pic.jpgThe American Medical Association (AMA) and numerous other medical associations, including the Medical Association of Georgia (MAG), are a strong voice for repealing the Medical Sustainable Sustainable Growth Rate (SGR). Led by the AMA, a very large group of influential medical associations wrote Congress late last year advocating that the SGR is “an enormous impediment to successful health care delivery and payment reforms that can improve the quality of patient care while lowering growth in costs.” The call for repealing SGR is increasingly strong and urgent.

SGR is the method used by the U.S. Centers for Medicare and Medicaid Services (CMS) to set Medicare reimbursement rates for doctors with a formula purportedly tied to economic growth. The SGR issue derives from a well-intended but seriously flawed attempt to curb federal spending. Pursuant to the Balanced Budget Act of 1997, CMS employs SRG as a method to ensure yearly increases in Medicare expenses do not exceed increases in the level of growth in the U.S. Gross Domestic Product. Under the SGR scheme, if spending increases more than a set level, physician payments are adjusted downward; if spending is below a set level, rates are increased.

At first, the SGR formula arguably worked – to a degree – but only while the U.S. economy grew. After the US economy stalled in 2002, SGR number crunching changed for the worst as Medicare expenses exceeded projections, a trend that has continued. As a result, virtually every year for the last decade there has been a risk to physicians of very significant cuts in Medicare reimbursement rates required by law. Rather than repealing or revamping SGR, however, Congress has repeatedly effectuated a last minute, legislative patch “fix” to avert a crisis, deferring a permanent solution for future political wrangling. For example, with the latest “fix,” the American Taxpayer Relief Act of 2012, Congress delayed a 26.5 percent cut in Medicare physician payments for one year. The Congressional Budget Office projects that physician payments under Medicare will be reduced by about 25% in January 2014. Again, some fix will be needed, as the cuts would cause many medical practices to close, denying patients access to medical care. The recurrence of this political issue continues to frustrate physicians in a big way. Many have left the Medicare program; others threaten to do so. Access to medical care is thus diminished, contrary to the essential purpose of Medicare.

Without question, Medicare payment reform is essential. There seems to be a consensus that SGR is seriously problematic, but – so far – a clear inability or unwillingness in Congress to fix the problem. Last minute legislation to avoid steep cuts is now predictable. The legislation by crisis should be brought to an end. A permanent solution is very important to ensure patient access to health care.

In their recent letter to Congress, the AMA, MAG and other associations advocated for transition from SGR to a new Medicare reimbursement model built on the following core principles.

– “Successful delivery reform is an essential foundation for transitioning to a high performing Medicare program that provides patient choice and meets the health care needs of a diverse patient population.
– The Medicare program must invest and support physician infrastructure that provides the platform for delivery and payment reform.
– Medicare payment updates should reflect costs of providing services as well as efforts and progress on quality improvements and managing costs.”

According to the letter, a transition plan should include the following elements:

– “Reflect the diversity of physician practices and provide opportunities for physicians to choose payment models that work for their patients, practice, specialty and region;
– Encourage incremental changes with positive incentives and rewards during a defined timetable, instead of using penalties to order abrupt changes in care delivery; and – Provide a way to measure progress and show policymakers that physicians are taking accountability for quality and costs.”

Our business and health law practice is dedicated to advocating and protecting the financial interests of physicians and health care businesses. Kevin Little is a 20-year business and health care lawyer, licensed to practice law in Georgia and South Carolina. We have offices in Atlanta and Augusta, Georgia. Our law firm can be reached at (404) 685-1662 (Atlanta) or (706) 722-7886 (Augusta) for a confidential consultation.

SOURCE: AMA letter

*Disclaimer: Thoughts shared here do not constitute legal advice.

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