MedPAC Ponders SGR Alternatives for Provider Pay

Abstract

WASHINGTON – Multiple options exist to permanently fix the Medicare Sustainable Growth Rate formula, but each has its cost to practitioners, patients, and the program, according to staff analysts for the Medicare Payment Advisory Commission. Among the options MedPAC staff recently presented to commissioners were adjusting the SGR's spending targets so that they are no longer cumulative and allowing some flexibility. Either option would remove the annual pay cut threat that doctors and others have endured since 2002 under the SGR, according to Cristina Boccuti, a principal policy analyst for MedPAC. However, neither option would leave any room to offer incentives for improved quality and efficiency, she added. In the past, MedPAC has recommended setting target growth rates – and payment rates – according to particular service categories, and the commission is looking in this direction again. For example, separate categories could be established for primary care, imaging, minor procedures, and anesthesia, allowing rates to more closely track volume of services. Two options that seemed to pique commissioners' interest: exempting certain providers (such as accountable care organizations) from the current SGR target but holding them accountable for other targets, and using penalties for physicians who are outliers in terms of resource use. MedPAC currently has two contractors working on projects to better determine the valuation of providers' time and resource use. More information will be available at the next commission meeting, Ms. Boccuti said. Every year since 2002, Medicare has failed to meet the SGR targets, causing physician pay, by law, to be reduced. However, Congress has routinely stepped in to legislate a way to avoid those cuts. C the avoided cuts are becoming a cumulative and growing debt bn the federal ledger. The White House, in its fiscal 2012 budget proposal, is proposing to reduce that debt over the next 10 years, at a cost of $370 billion. But the administration has figured out how to pay for that fix only for the first 2 years. The reality is that there's a declining pool of Medicare-specific offsets – required by law – to pay for fixing the SGR, Glenn Hackbarth, MedPAC chairman, said at the meeting. “We're in a deteriorating situation here; we're spiraling down,” said Mr. Hackbarth. “This isn't going to get better; it's going to get worse.” Mr. Hackbarth said that he envisions a future where lawmakers will have to take money from education or roads or some other nonhealth area of the budget to pay for the Medicare fix. “And that bothers me,” he said. The SGR-based uncertainty facing practitioners is undermining their confidence in Medicare and leading some to stop seeing beneficiaries, Mr. Hackbarth noted. He said that the time might be right to work out a “quid pro quo” with practitioners: an end to the yearly exercise to avert the SGR cuts in exchange for a payment system that has volume constraints and rewards efficiency and improved quality, or, alternatively penalizes those who fail to meet such targets. Alicia Ault is an associate editor with Elsevier Global Medical News.