Healthcare Reform and the SGR “Fix”: Addiction and Cure
Troy Tippett, MD
For the past several years organized medicine has found itself addicted to the annual attempt to fix Medicare’s sustainable growth rate formula. The SGR is defined in the business world as a measure of how much a firm can grow without borrowing money. After the firm has passed this rate, it must borrow funds to grow. However, this is not what the SGR means when it comes to Medicare.
The Balanced Budget Act of 1997 defined the SGR for Medicare, and henceforward it has been the bane of physicians participating in the program. The SGR is basically a formula for establishing an annual expenditure target for physician payments. If actual spending is less than the target, then payments are raised for physicians in the next year. Conversely, if the target is exceeded, then Medicare payments for physicians are reduced the following year. All seemed well with this formula until 2002, when physicians received a 5.4 percent cut in Medicare reimbursement with significant cuts to come. So began the long, sad saga of the annual “stop-the-SGR-cut” physician pilgrimage to Capitol Hill.
The scenario plays out as follows: At the beginning of each year, physicians begin asking Congress to “pretty please” not allow the upcoming automatic SGR cut to take place. This game continues through the spring, summer and into the fall, when finally, sometime in December, a deal is struck and Congress swoops in and prevents the cuts. Rather than getting a cost-of-living raise, however, physicians settle for a payment freeze or at most a 1 percent to 2 percent increase in Medicare reimbursement. As our overhead continues to rise at 2 percent to 4 percent, we are actually accepting a net payment loss each year. To add insult to injury, this reprieve is not really a reprieve at all because Congress never actually pays for these annual payment increases, instead using an accounting gimmick to prevent the immediate cut while at the same time deferring full payback to a future year. Thus, the SGR debt continues to accumulate and compound over time, leaving physicians with cuts in excess of 40 percent over the next decade and a huge budgetary hole to plug.
But wait! It gets even worse because in order for medicine to win these great “victories,” we typically also receive a bag full of “goodies” (for example, pay for performance, public reporting of physician quality performance data, mandatory electronic prescribing with penalties for those doctors who fail to comply, expansion of the medical home and limits on ordering diagnostic imaging) that we did not want and would never have accepted without the SGR extortion. Members of Congress love this game because it keeps physicians beholden to them and contributing money to their never ending congressional reelection campaigns. Even a country boy like me can see why Congress would never want the SGR to go away entirely.
So we fast-forward to the healthcare reform debate of 2009. The House of Representatives bill, the America’s Affordable Health Choices Act of 2009, H.R. 3200, supposedly would fix the SGR and eliminate our “debt” for approximately $245 billion. Unfortunately, this legislation doesn’t really fix the problem; it merely eliminates the “debt” and restarts the same old debt clock.
The bill was released in its entirety—1,018 pages—on a Tuesday afternoon, and some leading medical organizations had fully endorsed the bill by the next day! The two principal reasons cited to me by the leadership of some of these groups were that by signing on they would have a “seat at the table” and that since the healthcare reform bill being drafted in the Senate does not eliminate the SGR debt and fix the formula for the long term, medicine had to back all of H.R. 3200 to help ensure that the bill’s SGR provisions prevail in the final healthcare reform bill.
The AANS did not support this approach. With the Congress of Neurological Surgeons we had suggested that rather than providing an unqualified endorsement of this legislation, a more measured course would have been to delineate what physicians liked (a short list) and disliked (a much longer list) about the bill.
So, in my opinion, medicine needs to stop playing this annual game where Congress hangs us all over the cliff, merely to pull us back at the last minute with another handful of IOUs. It is time physicians stand up and say, “You can’t do this to me any more!” Congress can’t afford to allow a 22 percent cut in Medicare payments this next year or any other year, not because they love us, but because they know they would lose their jobs if that happened. Unless we collectively say NO!, this addiction will continue and we, and worst of all our patients, will be the losers.
Troy Tippett, MD, is the 2009-2010 AANS president. He is medical director of the Neurosurgical Group in Pensacola, Fla. The author reported no conflicts for disclosure.
For Further Information
- AANS/CNS 2009 Legislative Agenda [Link to posted Web article of Washington Watch]
- Healthcare Reform: What Neurosurgeons Need to Know [Link to posted Web article of Cover Focus: Orrico]
- Peck B: Is the sun setting on Medicare? Grim future, few bright spots without Part B “fixes.” AANS Bulletin 13(3):6-13, 2004