Weighing the costs
Repeal of SGR would mean big cuts elsewhere
The growing push by provider groups for congressional repeal of Medicare’s physician payment formula ran into the harsh reality last week of what paying for that change could mean for the rest of the program.
The steady drumbeat of provider organizations urging repeal of Medicare’s sustainable growth-rate formula by the Joint Select Committee on Deficit Reduction—charged with finding $1.2 trillion worth of 10-year deficit reductions—culminated in an Oct. 6 letter from 113 members of the House of Representatives.
“We urge you to include a full repeal of the SGR, to stabilize current payment rates to ensure beneficiary access in the near term, and set out a clear path toward comprehensive payment reform,” wrote the members of Congress, led by Rep. Allyson Schwartz (D-Pa.), to the supercommittee.
That congressional missive followed weeks of similar letters to the panel from provider advocates, including one the week before from the American Academy of Family Physicians, which also launched a national grassroots campaign to push for that.
But a common denominator in the appeals from members of Congress and from many provider groups was the lack of broadly supported ways the deficit group could offset the costly repeal. The offsets are critical because undertaking the $300 billion, 10-year repeal of the SGR would complicate the supercommittee’s difficult task by effectively increasing the total savings the panel would need to find.
Last week, the debt panel was handed a detailed way to pay for that costly change.
Ten years after first calling for Congress to repeal the SGR, the Medicare Payment Advi- sory Commission approved on Oct. 6 a firsttime comprehensive list of offsets from within Medicare to cover the cost of doing that. Unfortunately for MedPAC, the cuts are opposed by every provider group that has taken a public position on it.
The proposal, approved 15-2, includes a physician component—to reduce the 10-year SGR cost by about $100 billion—that would freeze Medicare rates for most primary-care physician services while cutting other physician services by 5.9% for three years and then freezing those rates for seven. The nonphysician savings in the SGR replacement plan— worth about $220 billion in 10-year savings— include 34% from drugmakers, 15% from beneficiaries, 11% from hospitals and 6% from durable medical equipment cuts.
Although many of the members of the commission were leery of the cuts they proposed, they portrayed the specific offsets as part of their fiduciary duty to Congress and a way to spur congressional action on repealing and replacing the Medicare physician payment formula. Several members said they hoped legislators ultimately would fund such changes through means outside of MedPAC’s purview, such as through malpractice reform.