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18-10-2012 | Article

Congress urged to ditch Medicare cost-cutting formula



medwireNews: Exercising their First Amendment rights to petition government for redress of grievances, national and state medical societies are asking Congress to junk the Medicare Sustainable Growth Rate (SGR) formula.

In a letter to Senate Committee on Finance, Chairman Max Baucus (D-Montana) and ranking member Orrin Hatch (R-Utah), 62 medical associations, and 48 state medical societies call the SGR formula "an enormous impediment to successful healthcare delivery and payment reforms that can improve the quality of patient care while lowering growth in costs."

The SGR formula, implemented under the Balanced Budget Act of 1997, is designed as a check on the growth of aggregate Medicare payments for physician services. The formula is calculated according to estimated percentage changes in fees for physician services and in the average number of Medicare fee-for-service beneficiaries, the estimated 10-year average annual percentage change in real gross domestic product per capita, and the estimated percentage change in expenditures due to changes in law or regulations.

But as payment systems move away from fee-for-service towards accountable care organizations (ACOs), patient-centered medical homes, and other models, the cuts to Medicare payments under the SGR are hampering efforts to re-design care, the organizations maintain.

"Physicians face yet another steep payment cut of 27% on January 1, 2013. For more than a decade, average payment rates under the SGR have remained stagnant and today are barely higher than their 2001 levels. Each year, patient access to care is eroded because the threat of steep physician payment cuts and last-minute congressional action to avoid these cuts create an environment where new Medicare patients have difficulty securing physician appointments," the petitioners write.

They call for scrapping the SGR, and replacing it with a transition plan that incorporates reform of service-delivery systems, supports physician infrastructure, and reflects the costs of providing care and complying with quality improvement and cost management efforts.

The societies say that the transition plan needs to assure that physicians are rewarded for cost savings "across the healthcare spectrum," and ties incentives to the actions of physicians themselves, and not to those of factors beyond their control.

The authors also argue that the plan should be structured to "enhance prospects to harmonize measures and alter incentives in current law; encourage systems of care, regional collaborative efforts, primary care and specialist cooperation while preserving patient choice;" and "allow specialty and state society initiatives to be credited as delivery improvements (deeming authority) and recognize the central role of the profession in determining and measuring quality."

By Neil Osterweil, medwireNews reporter