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SGR Dangles Over Fiscal Cliff

 |  By jcantlupe@healthleadersmedia.com  
   December 20, 2012

The Sustainable Growth Rate formula , the scourge of physicians, detested by both Republicans and Democrats, may be on the brink of being eliminated if the Obama administration has its way, according to healthcare sources.

For years, major physician groups have sought to get rid of the formula, which has meant proposed payment declines for doctors. And ironically, government actions to avoid the so-called "fiscal cliff" may open the door to elimination of the SGR.

The White House has reportedly proposed to get rid of the SGR as among its plans for avoiding the economic effects of tax increases and spending cuts that will occur in January if current laws are not amended. 

The budgetary negotiations between President Obama and House Speaker John Boehner, R-Ohio have been intense, but inconclusive.

"Our antennas are up for stuff happening," Jeremy Lazarus, MD, head of the American Medical Association, said. "Obviously, we want the SGR repealed and we're pleased the president said that."  The AMA sent a letter to lawmakers Wednesday in which it called the stalemate "inexcusable."

The Sustainable Growth Rate formula has been established to control spending for physicians. Each year since 2003, Congress has passed a "doc fix" to avoid significant cuts. Such funding shortfalls were pegged at 27% for 2013. It has become almost a tradition for Congress to fill the SGR gaps, with many saying that lawmakers have "kicked the can down the road" on the issue.

While it appears there are discussions on Capitol Hill about the SGR fixes, no one is making promises.  "We've got to see what comes down, obviously the other negotiations going on, lot of moving parts, things are very fluid at this time," Lazarus says.

Still, healthcare officials were buzzing with reports about the SGR Thursday. On Capitol Hill, however, there was no official word about any discussions on the issue from the White House or Boehner.  

Most of the discussions focused on what Republicans termed a "Plan B" to avert the fiscal cliff, which would include blocking tax increases for anyone exceed those whose incomes exceed $1 million.

"The details are soft right now," says Jeffrey Cain, MD, president of the American Academy of Family Physicians, referring to any plans regarding the SGR. "We've heard rumors and whispers." Still, with the issues swirling around the ‘fiscal cliff," there is a feeling that "this is a good time to really do something about the SGR," Cain adds.

"We're excited to learn of the interest from the House and Senate, and the President. Keeping the SGR in place means that healthcare costs will continue to escalate, and it will be harder for physicians to invest in new payment models like the patient centered medical home, Cain says.  

"There [have been] calls for repeal of the SGR since 2003, and we don't want decades to fix this," Cain adds. "We want to see carefully what proposals are put forth and we want to work closely with Congress."

Elimination of the SGR doesn't fully resolve all the fiscal problems as far as physicians are concerned, and the government must confront funding gaps that must be restored. The AMA has estimated that eliminating the SGR and freezing physician payments from Medicare over 10 years would cost $245 billion, based on Congressional Budget Office reports.

While the SGR is a target of physician groups, there is still a possibility that some doctors may face salary cuts, depending on their specialty, regardless of whether the formula is eliminated.  

Cain concedes that "payment enhancement" for primary care physicians is needed, and the "difference between specialty and primary care pay needs to be narrowed in order to have the highest quality" care.

Still, the SGR's got to go, Cain says.

"You're hearing a very strong physician community fed up with this," Cain says of the SGR. "The sword of Damocles is over our heads," Cain says.

Joe Cantlupe is a senior editor with HealthLeaders Media Online.
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