Make It Stop: Fixing the SGR for Good

Our guest blogger is Mandy Krauthamer Cohen, executive director of Doctors for America.

Retiring Senator Jim Bunning (R-KY) did more than hold up extension of jobless benefits and COBRA coverage with his antics. He also held up passage of a provision to stop the 21% Medicare payment cut to physicians that goes into effect today. The provision would temporarily patch the flawed formula that determines how Medicare reimburses physicians for the work we.

This formula, called the “sustainable growth rate” or SGR, has threatened to cut Medicare reimbursements for nearly a decade. This time, after a two month reprieve passed by Congress in late December, Medicare physician payments are scheduled to be cut by 21 percent.

Since 2002 Congress has been “patching” the SGR formula – preventing any cuts in payment but never really fixing the problem permanently. Each year the problem just piles onto itself – so what was a 2% cut back in 2002 has mushroomed exponentially into a 21% cut due next week. We have kicked the can down the road so many times that it barely resembles a can. The provision currently being held up by Senator Bunning in the Senate is another temporary fix – this one only for 30 days – aligning with the provision passed in the House last week.

So why doesn’t Congress just fix the SGR permanently and be done with it? While there is broad agreement that a 21% cut in physician payment is excessive and threatens access to physicians for our nation’s seniors, a permanent fix of the SGR formula is complex and expensive; some estimates say it will cost $245 billion. Adding to the complications, are the PayGo rules and the generally sour taste focusing on physician salaries leaves behind in a tight budget year.

In November, the House did pass legislation (H.R. 3961; the Medicare Physician Payment Reform Act), that would permanently fix Medicare’s SGR formula and wipe away the accumulated SGR deficit. HR 3961 replaces the current SGR formula in 2010 with a formula linked to the Medicare Economic Index, a gauge of inflation in physician-practice costs, as opposed to the GDP as it does now. In 2011, the formula would again return to being based on the GDP but would split physician services into two independent service targets – with growth targets of GDP plus two percent for primary care and preventive services and GDP plus one percent for all other services. While there is still room to debate whether or not this is the perfect solution – it is certainly better than another temporary “doc fix”.

Unfortunately, the Senate is not going to take up HR 3961 this week and thus another temporary fix is needed immediately. CMS will hold up the payment cuts from going into effect for a few days but physicians and seniors need the Senate to act pronto. Once passed, the clock is already ticking on a 30 day patch and the Senate should act quickly to take up HR 3961 – finally ending this SGR Groundhog Day scenario for good.