SGR Fix Gets Cool Industry Reception

Jeff Elliott, for HealthLeaders Media, November 18, 2010

The controversial sustainable growth rate formula that is slated to ultimately cut physician payments by 25% beginning Dec. 1 may be done away with by a new deficit-trimming proposal.

Draft recommendations submitted by the Obama-appointed, bipartisan National Commission on Fiscal Responsibility and Reform are projected trim federal spending across the board by $200.3 billion and reduce the federal deficit by $4 trillion.

The proposal, delivered by commission co-chairs Alan Simpson, former Republican Senator from Wyoming, and Erskine Bowles, chief of staff to President Clinton, would eliminate the SGR—an action the industry has been calling for—but still lower physician pay incrementally over the next decade, resulting in Medicare savings of $10 billion between 2013 and 2015 and an additional $14 billion by 2020.

But the healthcare industry remains wary of any proposal that puts physician pay at risk. "Additional provider cuts on top of what has already been outlined in the health reform laws is a big concern," said Rick Gundling, vice president of healthcare financial practices for the Healthcare Financial Management Association. "The handling of the physician payment has been frantic historically at best, so seeking a long-term solution is commendable, but paying for it with additional provider cuts will make serving the communities that much more difficult."

Repealing the SGR, or the so-called "doc-fix" portion of the recommendations, would cost $276 billion according to Fiscal Commission staff estimates. In addition to physician pay cuts, other proposals that were floated to help offset those costs include directing CMS to establish a new payment system designed to reduce costs and improve quality beginning in 2015.

Additionally, the proposals call for tort reform to cap non-economic and punitive medical malpractice damages and the expansion of the Independent Payment Advisory Board—a lightening rod for industry criticism—which Gundling noted is one portion of the healthcare reform package that many in Congress are  likely to challenge.

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