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.
"The system that is currently used to pay physicians for providing services to beneficiaries in the Medicare system is broken and has been for some time," said Rep. Joseph R. Pitts, (R-PA), subcommittee chairman, in a statement. "The dilemma that currently threatens doctors and Medicare beneficiaries alike is all too familiar. According to the most recent Congressional Budget Office estimate, if nothing is done, physicians will see reimbursement for services provided to Medicare patients by 29.4% on Jan. 1, 2012, according to Pitts.
According to the AMA, many physicians, faced with cuts, want out of Medicare. As many as 82% of physicians say they will need to make significant changes in their practices that will affect access to care, according to the AMA. We have been here before.
Meanwhile, the cost of fixing the problem continues to grow, as Pitts calculates it. In March, the CBO estimated that the price just to wipe out the accumulated debt and return to a baseline of the SGR would be about $298 billion.
"We've been doing this for 10 years, dealing with the 'doc fix.' In reality it's not good for doctors, it's not good for patients; just in terms of going through this every year," says Christian Salgian, director of the division of advocacy and health policy for the American College of Surgeons. "Somewhere around October, November, or December, depending on the year, it gets down from discussions of a long term fix, 'let's get something done here' to "let's stop the cut." There is a shift in mindset with some kind of desperation. It's just kicking the can for another year, and nobody supports that. We're talking about 30% cuts for another year, and all we would be doing is hiding the cuts for another year."
Salgian says Congress has to deal with the $300 million in possible cuts and get rid of the SGR. Once the SGR is eliminated, legislators can work on a timeframe that would allow demonstration projects to be examined under a new Medicare physician payment system, the subcommittee was told by the physicians, and not a "one-size-fits-all formula."
Specifically, they are proposing to replace the SGR with a separate service system that they say recognizes the unique various types of physician services, while allowing for increased payments for areas experiencing workforce shortages like primary care.
Unlike the SGR, which bases reimbursement on the overall spending on all physician services, a proposed new system, the "separate service category growth rates" (SCGR) would determine reimbursement based on the spending and volume growth among services. Among the advantages: it recognizes that all physician services are not alike, and lower growth services, such as primary care, would no longer be the subject of the "blunt cuts" of the SGR, according to Salgian.
"There's a recognition of a need for three to five years of stability and let's figure out what this new replacement can look like," Salgian says. "The healthcare reform law has a number of demonstration projects in there, including accountable care organizations, bundling projects, shared savings models, and shows what this system may look like."
Indeed, according to the HealthLeaders Media Industry Survey 2011, more than half, (52%) of physicians surveyed said they expect to be part of an ACO within the next five years.
"Quality improvements have got to be part of this," Salgian adds. "We understand that costs need to be brought down and quality improvements help bring those costs down. We are working with other physician groups to put together these proposals. There should be a separate service category where primary care, surgery and others, three to five separate targets, rather than one global target for all physicians,"
David Hoyt, MD, FACS, a trauma surgeon and executive director of the American College of Surgeons, testified before the House Energy and Commerce health subcommittee, noting that the "current fee-for-service model" is unsustainable.
"Any new payment system should be part of an evolutionary process that achieves the ultimate goals of increasing quality for the patient and reducing the growth of health care spending – goals we do not believe are mutually exclusive," Hoyt said in his testimony.
"The first step towards reforming the Medicare payment formula is to immediately eliminate the SGR and set a realistic budget baseline for future Medicare payment updates, which fairly reflect the costs of providing quality health care, preserving the patient-physician relationship and ensuring patients have continued access to the physician of their choice," Hoyt told the subcommittee.
It is terrific that there are specific alternatives now on the table for Congress to complete. But there is still is the big question, one that will be wrapped in much politics, certainly. What about the $300 million cost?
And these physician groups are seeking at least three years of stability while they examine potential payment models or try them out. Stability?
"How do you get to that period of stability?" Salgian says, repeating my question. "Frankly, it's going to cost some money. Somebody is going to have to invest in real money, not small money, that each year hides the problem."
During that period of "stability" without the SGR, "we can test some models to replace the SGR. We can't put the resources appropriately if we are still fighting these cuts year after year," Salgian says.
"Everybody agrees it's a problem. Everybody agrees we've got to find a solution," he adds. "Everybody agrees this is not a long term solution, but when it comes down to paying for it, that's the problem we have."
Sen. Kent Conrad, D, ND, chairman of the Senate Budget Committee, has indicated that he would include a "doc fix" proposal as part of a 2012 budget plan. A spokesman for Conrad says there was no timetable for release of the plan although many expected it this week.
Lately, the discussion in Washington has centered on temporary "doc fix" legislation, but that's not exactly the permanent solution that the physician groups seek, as I see it.
With a couple of congressional committees potentially exploring the SGR issue, Salgian expects a "little bit of turf" battles.
Salgian is closely monitoring congressional actions. "Do I feel confident? We've doing this dogfight for 10 years," he says. "Frankly, how they are funding this now is like paying the minimum of a credit card bill."
The SGR isn't the only concern facing physician groups.
They are worried about the impact of the Independent Payment Advisory Board, which is scheduled to make recommendations on overall Medicare spending in 2014. The Patient Protection and Affordable Care Act established a 15-member IPAB to "extend Medicare solvency and reduce spending growth through the use of a spending target system and fast track legislative approval process," according to a House health subcommittee memorandum.
"Should the SGR remain in place when the IPAB takes effect, physicians will be subject not only to the SGR but to the further reductions in Medicare reimbursement based on IPAB's authority," Hoyt told Congress.
But that's another problem up the road, another potential headache. First things, first: the SGR.
Joe Cantlupe is a senior editor with HealthLeaders Media Online.
