SGR Alternatives Considered, But Cost of Repeal is the "Elephant in the Room"

Last week, the American Medical Association and the MGMA-ACMPE sent letters to the House Committee on Ways and Means offering alternatives to the sustainable growth rate, which is the cornerstone formula of the current Medicare physician payment system.

Currently, if Congress does not act to repeal or delay the SGR by December 31, physicians will bear a 30.9 percent reduction in their Medicare payments, a figure that many physicians said would put them out of practice.

The AMA and MGMA-ACMPE both said the SGR is unsustainable and "does not adequately address growth in spending." Since 2001, the total operating cost per full-time equivalent physician increased by 56.1 percent, but physician Medicare payments have only increased 2.9 percent.

AMA CEO James Madara, MD, and MGMA-ACMPE President and CEO Susan Turney, MD, offered various alternatives to the SGR. These included rewarding physicians for quality and efficiency, developing new models of payment such as shared savings models and training physicians to encourage beneficiaries to search for high-value healthcare.


Ken Perez, senior vice president of marketing and director of healthcare policy for MedeAnalytics, says the AMA and MGMA-ACMPE made compelling arguments for a repeal of the SGR, but it would be hard to determine how the alternative strategies will impact the national deficit.

"The organizations recommend the use of new and flexible payment systems, but such a 'menu' approach is almost impossible for the Congressional Budget Office to score," Mr. Perez says. "[This] makes 'scoring' — coming up with a credible, quantitative assessment of the proposed changes' impact on the deficit — challenging to say the least."

Mr. Perez says the biggest hurdle to overcome in the SGR debate is how to pay for a full repeal. "Not surprisingly, neither the AMA nor the MGMA touch upon arguably the biggest roadblock to its reform, namely how to fund the proposed change to current law," Mr. Perez says. "Granted, that is not the responsibility of the AMA or MGMA, but it remains the major sticking point in dealing with this continued elephant in the room of deficit reduction."

According to the CBO, a 10-year freeze of physician fee schedule rates would cost about $316 billion, and Mr. Perez says the recommendations of the AMA and MGMA-ACMPE could escalate that total to $400 billion or more. Hospitals were already negatively impacted from the most recent SGR fix, and for the SGR to become a thing of the past, Congress will need to find a more comprehensive cost solution, he says.

More Articles on the Sustainable Growth Rate:

House Legislation Would Permanently Repeal Sustainable Growth Rate

5 Points to Know on the 2012 Medicare Trustees Report

Which States, Specialties Contributed Most to the SGR Deficit?

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