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Lawmakers Seek SGR Alternatives, But Who Will Pay?

Joe Cantlupe, for HealthLeaders Media, June 1, 2011

The American Medical Association and the American College of Surgeons leaders and those of other physician groups last week testified before the House Energy and Commerce Committee's health subcommittee, once again urging them to reform what they called the "deeply flawed" SGR formula. We have all heard that refrain. But now they are adding a twist. They are coming before Congress with a distinct long range plan to get rid of the SGR with value-related projects such as bundling, and a separate formula for various physician categories instead of a general formula affecting all physicians.

There will be more committees to hear what they say, with testimony expected soon before the powerful House Ways and Means Committee. In March, the Energy and Commerce Committee sent a letter to a whopping 51 medical associations seeking feedback on how to improve the physician payment system. Twenty-nine responses are listed on the House committee's web site.

The medical groups are looking at the future and seeing a hazy picture, but there's a problem, right now: where's the money for it? In Congress, there is talk of $65 million for the yearly "doc fix," but as far as the medical groups are concerned, more than $300 billion is really what's needed  to get rid of the SGR once and for all, and start anew.

The latest "doc fix" is scheduled to expire in January 2012, with a proposed cut. The cuts were delayed for months last year.

The groups are seeking "stability" in the structure for the next three to five years before implementing other procedures, and in the process throw out the SGR, which has been controversial and probably ineffective since its implementation in 1997 for calculating Medicare reimbursement for physician services. The SGR was enacted to determine physician payment updates under Medicare Part B.

The 10-year cost of a long-term solution has grown from about $48 billion in 2005 to nearly $300 billion today, the physician groups say. Congress passed legislation last year that freezes Medicare reimbursement to physicians through the end of 2011 and averted a 25% pay cut scheduled for January 1, 2011. Earlier in the year, Congress passed at least five delays to the cuts.

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