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.
If enacted, IPAB would have the authority to impose federal cuts in hospital pay for patients covered by Medicare and Medicaid; raise the IPAB's savings target to 1.5% instead of 0.5% in 2015; impose payment reductions even when Medicare spending does not exceed price index growth rate; and eliminate the trigger that could de-activate IPAB by 2019.
But perhaps the most damaging changes for the industry is the proposal to accelerate the payment cuts to disproportionate share hospitals, home healthcare and Medicare Advantage plans, which is expected to save about $9 billion. "Our members are already planning for cuts in Medicare payments from health reform and the continued shift to a value-based payment system from a volume-based one," Gundling noted. "The shortened timetable will make it even more difficult to adapt to the changes."
While this ambitious proposal would institute significant industry changes, it's not yet at the forefront of many provider minds. Rather, an immediate fix to the looming SGR cuts is generally their top concern, according to Anders Gilberg, vice president of public and private economic affairs with the Medical Group Management Association. Further, Gilberg noted that as only a draft recommendation, it has a long way to go before it would be voted on by Congress.
- Cheryl Clark contributed to this report.