The ACP Advocate Blog
by Bob Doherty
Thursday, October 15, 2009
Finally, a plan to end the lunacy of the Medicare SGR
Yesterday, I joined representatives from the AMA and other physician organizations in a meeting with the Senate Majority Leader Harry Reid (D-NV), Senator Max Baucus (D-MT), Senator Chris Dodd (D-CT) and Nancy Ann Deparle, the head of the White House Office for Health Reform, to discuss a plan to get rid of the Medicare SGR formula, once and for all. We learned that Senator Reid will ask the Senate to vote next week on a bill to repeal the SGR and all its accumulated scheduled cuts to physicians for the next 10 years.
It's about time. I can't think of a single other issue that has so bedeviled physicians and Congress alike as much as the SGR.
Under the Medicare sustainable growth rate (SGR) formula, physicians have faced deep annual cuts in payments since 2002. Congress has stepped in all but one year to enact a temporary "patch" to stop the next year's cut. But rather than accounting for the difference between the lower payments mandated by the SGR, and the higher payments under the patch, Congress has assumed that the higher spending will be made up with even an even deeper SGR pay cut the following year. This is why the "patch" for an estimated 5 percent SGR cut in 2008 resulted in a scheduled 10.5 percent SGR cut in 2009. And why the patch for the 10.5 percent SGR cut in 2009 balloons to a scheduled 21 percent cut in 2010.
To illustrate how crazy all of this is, imagine you worked for a small business, and imagine that your boss told you that your wages would be cut by 10 percent this year. Later, your boss announces that your company will not cut your wages, but that the only way the company can afford to stop the 10 percent cut will be to pretend to reduce your wages by 20 percent the following year. She tells you not to worry, though: they will just do the same thing next year - prevent the 20 percent cut by pretending that the cost will be made up by cutting your wages by 40 percent the following year. She adds, though, that the company has no intention of ever allowing the 40 percent cut to happen. They just have to pretend they will so their accountants will allow them to stop the immediate pay cut.
No small business would actual run its payroll budget this way. Yet this is the budget lunacy that Washington has employed to hide the true costs of stopping Medicare physician payment cuts.
On Monday, Senator Reid will bring S. 1776, the Medicare Physician Payment Fairness Act, to the Senate for a vote. The bill, introduced by Senator Debbie Stabenow, simply sunsets the SGR and eliminates all of the scheduled cuts in 2010 and subsequent years. Instead of using gimmicks to hide the cost of SGR repeal, as Congress has done in the past, the costs would be reflected in the estimates going forward of Medicare spending. Following Senate action, the House of Representatives is expected to take up the issue.
Once the SGR is repealed, Congress would have to design a new system for updating physician services with the input of the medical profession.
I applaud Senators Reid, Baucus, Dodd and the White House for making this commitment to end the lunacy created by the SGR, including the smoke and mirrors budget accounting designed to make the costs look lower than they really are. Getting the bill approved by the Senate is no sure thing, though. Senator Reid will need at least 60 votes to overcome procedural obstacles to its consideration. You can help him and ACP get the votes needed to get rid of the SGR, once and for all, by making a call to your Senators today. Click here for more information.
Today's question: What will you be doing to get your Senators to vote for S. 1776 and permanent repeal of the SGR?
About the Author
Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog
Email Bob Doherty: TheACPAdvocateblog@acponline.org.Follow @BobDohertyACP
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