This makes it all but certain some sort of fix will be approved before the New Year. But will it be a permanent one? A repeal of the SGR could be politically challenging to get approved. For one, any replacement will result in higher physician payment rates going forward, and thus will result in a long-term spending increase that many Republicans would rather not be associated with. According to a Congressional Budget Office, a 10-year repeal would cost $140 billion — not an insignificant increase in government spending.
Perhaps it’s time for a more significant — and disruptive — change to physician payments: Doing away with Relative Value Units, the foundation of our nation’s fee-for-service payment structure. I am not so naive to think this will actually occur this year. The change would fundamentally alter how physicians are paid, and likely create an administrative nightmare, at least in its first few years. HHS already has enough headaches to deal with that it certainly won’t be pressing the Administration for this sort of change anytime soon.
However, if physicians took on risk-adjusted capitated payments for Medicare patients, they’d be incentivized to keep patients healthy, which would mean less hospitalizations and emergency room trips for Medicare patients and would likely lead to big savings for the Medicare program. And while this sort of payment program would still lead to more government spending for physician payments (i.e., no 20 percent cut in payments), enacting it would likely cost less than the $140 billion straight repeal of the SGR.
Certainly, many physician practices don’t have the resources — such as electronic medical records and advanced analytics — needed to properly manage the health of a Medicare population. But, as this changes, transitioning to a payment system that rewards physicians for keeping patients healthy, rather than just treating them, one ailment at a time, could significantly improve how care is delivered in our country.
After all, no one wants a doctor who is paid based on how many services provided and the complexity of those services. Or a doctor who is encouraged to see as many patients as humanly possible in one day in order to optimize his or her earnings. Instead, patients want a doctor who is incentivized to provide the best possible care for them; who is incentivized to keep them healthy, and out of the office or hospital.
A payment system like this, I’m afraid, is a way’s away, but it may be just what the doctor ordered to help rein in federal healthcare spending.
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