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SGR Ripe for Repeal, Where's Congress?

 |  By jcantlupe@healthleadersmedia.com  
   May 09, 2013

Physician groups say the time is finally right for lawmakers to overhaul the disdained sustainable growth-rate formula. But no one in Congress is embracing a specific plan, and the funding possibilities are uncertain.

The much-maligned sustainable growth rate formula is caught in the vise of what's known on Capitol Hill as "issue fatigue," an American Medical Association official in Washington D.C. told me recently. And that's a good thing.

Essentially, SGR is an issue that gets an airing in Congress every year, but members shout it down before anything gets accomplished. When this keeps happening, year after year, fatigue sets in among lawmakers. Eventually they conclude that something (anything?) must be done; otherwise it just will keep coming back.

Over the last several years, Congress has imposed the "doc fix" to ward off potential cuts in the SGR, which is scheduled to lower Medicare rates by 24.4% in 2014. The SGR sets Medicare physician payment rates through an economic rate formula set in 1997. Proposed cuts have prompted Congress to delay the cuts since 2002, but have essentially increased the price tag of yearly fixes.

"There is this issue fatigue on the Hill," said the AMA official, who did not want to be identified. "It's getting as bad for (Congress) as it is for all of us. Coming up with money for these short-term fixes is getting harder and harder. In the end, you fix this for a year and have the same problem the next year."

Issue fatigue may be surfacing as a major factor on the doc fix, but there's something even bigger that may drive Congress to get rid of the SGR for good: a fiscal bargain.

That "bargain" refers to Congressional Budget Office (CBO) projections. Under the new Medicare spending plans, CBO estimates that keeping Medicare physician payments at their current level over a 10-year period would cost $138 billion. That's a significant reduction from the $243 billion CBO estimate for the same policy a year ago.

Although uncertainty has haunted the SGR debate for years, an element of optimism has crept into the debate this year because "it's a good deal right now," Frank G. Opelka, MD, FACS, vice chair of the National Quality Forum's consensus standards approval committee, told me the other day.

Healthcare advocates say it's time to strike: get rid of the SGR and put a new plan in its place. When I asked for his view, Jeremy Lazarus, MD, president of the American Medical Association, sent me a statement indicating that there is a definite economic incentive for Congress to act now to repeal the SGR, noting the CBO cost projections.

"The CBO estimates that the cost to repeal the SGR is now less than half the cost projected at this time last year. Congress should act now, before this sale price ends," Lazarus says. "At a time when members of the baby-boom generation are aging into Medicare at an average rate of 10,000 each day, we cannot afford to wait any longer."

Rep. Kevin Brady, (R-TX) chairman of the House Ways and Means health subcommittee, also said in a statement before a hearing Tuesday on the SGR that he was hoping to take advantage of the "good CBO cost estimate."

"While funding the money to pay for an SGR replacement policy remains a challenge, the most recent Congressional Budget Office SGR repeal estimate surely helps," he adds.

Brady pointed out, specifically, how physicians are upset over the continued failed attempts to deal with the SGR and the repeated "doc fix."

"Physicians are understandably frustrated," Brady said. He added, "The current broken system is forcing doctors to rethink their future with Medicare, consider closing their private practices or joining up with a hospital. Who can blame them? The SGR is a major contributor to an unhealthy system—and it needs to change this year."

Over the last several months, House Republicans have proposed various payment models based on what they term "quality metrics, performance, and clinical improvement," which has drawn bipartisan support. Providers are also trying to get Congress moving by providing more details of plans, such as proposing to incorporate clinical data registries to evaluate quality of care.

"Aligning clinical data with improvements to claims data is the most robust path toward true quality improvement," David Hoyt, MD, FACS, executive director of the American College of Surgeons, said in testimony before the health subcommittee.

While Congress is examining specific bills and probably a five-year value-based transition plan from the SGR, no one is embracing a specific plan, and the funding possibilities are uncertain.

"My hope is that we can put the days of kicking the SGR can down the road behind us," Brady said, using the most-favored cliché for this slow-burner of an issue.

Not even the determined Ways and Means subcommittee was able to move the issue forward. It held three hearings on improving the Medicare physician payment system last year, trying to provide a framework for change. Anders Gilberg, senior vice president of MGMA-ACMPE, (Medical Group Management Association-American College of Medical Practice Executives) told me that, indeed, the subcommittee "has seized upon the reduction, and there is an impetus to try to do something this year, replacing the SGR."

But, Gilberg asks: "With what?"

One of the things MGMA-ACMPE has been working on is what Gilberg calls a "glide path" from the SGR formula, which Gilberg also believes may take five years to test. "This isn't one size fits all," he says. "Primary care physicians aren't going to like bundling payments like a surgeon. We need to repeal the SGR, leave our options open, and get physicians into quality models."

Opelka of the National Quality Forum, told me that a political consensus appears to be emerging for approval of an alternative payment model over a period of years.

"SGR grew up in the volume-based world, and we tied targets for payment to available dollars. Those available dollars were tied to overall utilization of service demand," Opelka told me in an interview after testifying Tuesday.

"As time moved on, the SGR was not an adequate way of addressing the problem, so we're now doing this healthcare transformation, moving us from a volume proposition to value."

"We need targets somehow aligned so we don't have competing economic forces driving the delivery system," Opelka says. "It's still unclear in everyone's mind how do we actually do that."

For now, all eyes are on Washington to see how this will play out for physicians, and the Medicare patients who rely on them.

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Joe Cantlupe is a senior editor with HealthLeaders Media Online.
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