Seniors ever wonder why your doctors are starting to close their practice or not take Medicare anymore? The reason is the Sustainable Growth Rate which governs Medicare physician payment rates. The formula calls for a dramatic payment cut every year for the past 10 years. Congress introduced a bill on the 19th of March to repeal this formula; this is because on March 31, doctors will face a 21% reduction in Medicare payment rates. The SGR Repeal and Medicare Provider Payment Modernization Act of 2012 is a permanent repeal of the SGR formula and in its place would be a payment system designed to focus on quality of patient care instead on volume of patients.
Last week, Senate and House lawmakers introduced legislation to permanently replace Medicare’s sustainable growth rate formula. Congress in March 2014 approved a short-term delay to scheduled reductions to Medicare physician reimbursement rates called for by the SGR that expires on April 1, 2015. Physicians face about a 21% reduction in Medicare reimbursement rates unless Congress acts by then. The SGR is a reason there is a potential doctors shortage by 2020. The leadership in Congress appears to agree with that the reduction in Medicare reimbursement will not work and therefore reduce the number of Physicians that treat Medicare patients. They agree that the universally criticized Sustainable Growth Rate (SGR) method of Medicare reimbursements should be repealed. Congress has suggested that it be replaced with the new Merit-based Incentive Payment System (MIPS), a permanent Medicare fix.
In addition to repealing the SGR, the $200 billion proposal would institute significant changes over the next decade, including a variety of performance measures that will help dictate the level of reimbursement a provider will receive. While the price tag alone will likely cause some conservatives to balk at the proposal, it is the ongoing costs that are activating fiscal conservative interests. At this point, only $70 billion is paid for in the first decade, leaving more than half of the total cost unaccounted for. This could cause an increase in out-of-pocket cost for seniors. The increase would be in the Medicare advantage planes that are designed to help pay for the expenses that Medicare does not. Is this repeal good for seniors on Medicare or better for the doctors? The bill seeks to reform the Medicare system, and the American college of Surgeons is praising the repeal because they believe it will bring stability to the Medicare Program according to themarketbusiness.com. The college will continue to urge congress to pass this bill, because it protects Medicare beneficiaries and the practicality of surgical practices.
The SGR was introduced in 1997 because the spending of physicians with Medicare had increased. The idea was to base Medicare physician fees on total program performance the prior year. Therefore, if Medicare spending was above a certain target, payments to physicians would be cut or frozen, in the current year. This actually caused total spending to increase. If the SGR doctor pay cuts had been allowed to take place, and not blocked by repeated congressional doctor fixes, doctors would now be getting paid pennies to see Medicare patients. Therefore, there would have been fewer doctors treating Medicare patients. In addition, the repeal is an attempt to prevent the increase of doctors opting out of Medicare completely. Will the repeal of the SGR save Medicare? Time will tell.