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?


Robert J. Sobel, M.D. said...

This certainly is a development we need if the public program that is not an option and without competition is to set a model that can help us right the ship of health care costs. Nevertheless, we are really parsing physician reimbursement well beyond what is proportionate to our share (1/7th) of the health care pie. The brand-generic roulette goes on unimpeded, wasting administrative time, focusing on financial coercion without delivering savings to the system as a whole, and distracting patients and physicians from the deliberative process which is management of long-term health.

If the bubble of investor-driven health care enterprises, the fallacy of managed care and cost savings, and excess hospital infrastructure is left alone, the system will be rudderless. The current sausage is not yet edible.

Calls are in. I'll be available to confer with anyone who wants to help us overturn Hatch-Waxman.

Arvind said...

This is a very promising development, indeed, if the Senators truly mean what they said. I find it very difficult to believe that Sen. Baucus, who did not include this provision in a plan that he just passed a few days ago, now actually means to join with others that want to repeal SGR. Somehow the whole things does not make sense. I will make the call to my Senators, but can you please explain Baucus' flip-flop here?

Jay Larson MD said...

I wonder if the SGR repeal was separate from health care reform bill because of the cost to repeal the SGR. Repealing the SGR is over $200 billion. If this was added to the health care reform bill, it would result in increasing the Federal deficit. By keeping the SGR repeal out of the reform legislation, the promise for health care reform legislation not to increase the Federal deficit would not be broken. A bit of smoke and mirrors. Where the funds to the SGR repeal comes from is a mystery. No matter how it is done, it will be nice to have the SGR out of the picture for a while.

BDoherty said...

This isn't a case of Senator Baucus "flip-flopping." He didn't include repeal of the SGR in the Senate Finance bill because this would have added $240 billion or so to the cost of the bill, in which case it would have not met the standard of budget neutrality and President Obama's insistence that the health reform bill not add a dime to the federal deficit. All along, he had said that he wanted to another path that would allow the Senate to act on the SGR repeal.

His commitment--and that of the Majority Leader Reid, Senator Dodd, and President Obama--to the SGR repeal is real. I was in the meeting on Wednesday with them when the plan was announced to bring repeal to a Senate vote next week. They are risking a great deal of political capital to get the bill passed, because they will have to overcome objections from fiscal conservatives to the cost and to others about the process for bringing this directly to the Senate floor. They will need 60 Senators to vote for "cloture" on the bill on Monday, and then 60 Senators for two more procedural votes (including one to waive the budget rules) before it can be voted on by a simple majority. It is not a given that a successful vote for cloture on Monday means that we will have 60 votes on the other two procedural votes. We need the help of ACP members to get the votes from your Senators, including Republican votes because some Democrats likely will vote no.

Ralph Schmeltz, MD said...

How sure can we be that there will be reasonable updates to reimbursement? "0" is better than negative, but 10 years is a long time. Is that acceptable?


BDoherty said...

Dr. Schmeltz raises an important question. Try to think of this as a two step process:

1. Congress votes to repeal the SGR and the all of the accumulated SGR cuts, as S. 1776 would do. This "wipes the slate" clean so there are no SGR cuts, but also no system to replace the SGR or to determine what the updates will be. Because S. 1776 gets us back to square one, it shows 0 percent updates going forward--no cuts or increases.

2. Once the SGR and the accumulated cuts are wiped out, Congress will need to create a new system for updating physician services to ensure that the updates reflect increases in physicians' costs and other factors, with input from the medical profession. This would require separate legislation, either as part of the health reform bill or in another bill. However, you can't get to this step without first eliminating the SGR and the accumulated cuts (step #1). By eliminating the accumulated SGR cuts, the budget cost of any new system to provide physicians with positive and predictable updates will be much lower.

One other piece of news: the Republicans and Democrats reached agreement today to allow S. 1776 to proceed to a vote next week--the GOP agreed not to filibuster it--in exchange for the GOP being allowed to offer a "limited" number of amendments. As a result, there will be no cloture vote on Monday. We expect, though, that the key vote to waive the budget rules so that the cost of the SGR repeal doesn't have to be paid for with cuts elsewhere will take place on Tuesday, and will require 60 votes. ACP members need to continue to urge your Senators to vote to waive the budget rules and final passage of S. 1776. Check ACP's legislative action center the latest updates.

Rich Neubauer MD said...

I've called my (D) Senator from Alaska and he has already signed on as a co-sponsor of the bill.

I've called my (R) Senator from Alaska twice thus far and urged support. I plan to call her again on Monday given that the crucial vote is anticipated on Tuesday. She is a self-proclaimed friend of primary care, prides herself as having a special interest and expertise in medical issues, and is a member of the Senate HELP committee. I have great hopes that she will see beyond any partisan considerations and support this important measure.

Having attended 8 years of ACP Leadership Day activities, been an ardent supporter of the Key Contact Program, and having witnessed the destructive effects of the SGR issue in my community on access for Medicare patients, it will be a relief to see the SGR go bye-bye along with its cumulative debt if this important legislation goes through.

In a larger sense, I welcome this as an important preliminary step to the larger reforms that need to come and the strategy of "re-setting the clock" in this realistic fashion.

I had the same question as Ralph Schmeltz about what will come after the SGR is gone, and appreciate the answer you've given -- which makes sense.

David Hecht, MD said...

This is wonderful news. However, is it true that they also requested we back off malpractice/tor reform at the same meeting (one organization said so)? Either way, we need to use any leverage we have to get that issue in "a" health care bill. We in Illinois/Cook county have been getting "killed" on this issue, and need this fixed now! Once everything is in place and payments begin to flatten for all providers over coming years, states with low malpractice rates will be a major draw for providers due to increased income margins compared with states without caps or other measures.

Health care legislation as proposed is not favorable to large academic/tertiary medical centers that will remain highly vulnerable and unable to keep up with costs of malpractice. There should be no health care reform without malpractice reform. They can offset some of the $250B from the SGR bill with the OMB's projected $54B savings from malpractice reform.

Steve Lucas said...

My thoughts would mirror those of Jay's. Of real concern is the public statements by news commentators that this would be a raise for doctors. As a business person I can fully appreciate how this constant specter of reduced fees through no fault of the practice would be a very nagging and have a negative impact on any practice.

When we talk about attracting young doctors to the practice of front line medicine certainly working conditions, time with family, and stress play a major part in that decision. Certainly not having a stable income contributes to the stress part of the equation.

Steve Lucas

Unknown said...

Dream on guys. Read this NOW. Still want that seat at the government table? They are making fools of you.

BDoherty said...

Dr. Hecht in essence asks if there was an agreement that the physician organizations would back off on advocating for medical liability reforms in exchange for repeal of the SGR. The short answer is absolutely “not”---and I was at the meeting with Senators Reid, Baucus, and Dodd, so I would know. Reform of the medical liability system remains on ACP’s list of top four priorities for reforming the health care system.

The SGR aside, we need to understand that Congress will not enact a national cap on non-economic damages; it didn’t do so when the GOP controlled the House, Senate and White House, and a vote for caps would not anywhere close the required 60 votes today in the Senate. So don’t be misled by amendments that may be offered to pay for the SGR fix by enacting a med mal cap—such an amendment would sound great at first, but would effectively kill SGR repeal. We need to focus our efforts right now on getting 60 votes on Tuesday for repeal of the SGR without linking it to other issues that will give Senators, who otherwise would support us on the SGR, a reason to vote no. Then we can get back to advocating for health reforms that include such ideas as supporting states that want to initiate promising new models to reduce the costs of defensive medicine, such as health courts that would allow medical liability cases to be heard by expert judges rather than lay juries.

Unknown said...

Wrong again. The government is dealing in smoke and mirrors, basically cheating. If you think they will vote in an alternate system to cover physician reimbursement, you better think again.

Unknown said...

This, from Taxing our patients to cover healthy younger people. Is this what the College wants? Has anyone thought this through? Or are you all on the Obama bandwagon?

Unknown said...

"In the face of objections from members of his own party, Senate Democratic Leader Harry Reid, D-Nev., is backing away from a plan to keep doctors who treat Medicare patients from experiencing drastic cuts in their annual federal reimbursements."
Why are you surprised. Need any help taking that knife out of your back?

BDoherty said...

As I have explained in the past, this blog to be a place for a wide range of comments, including those that strongly disagree with ACP or the views I express. At the same time, I reserve the right to not accept comments that cross a line from debate over the issues to invectives, personal attacks, and impugning other people’s motives.

I have been concerned that one person who has been posting comments of late (it is self evident who I am talking about) has used words like “prostitute” … “fools” … “cheaters” to characterize those with whom the commenter disagrees. I don’t think such rhetoric illuminates the issues or contributes to reasoned debate. There are blog sites for those who want to “flame” those with whom you disagree, but this is not it. I ask this commenter and others to continue to express your views, forcefully and directly, but to avoid the name-calling and invective. Comments that do not follow such blog etiquette and our own guidelines will not be accepted.

Now, getting back to the actual issues - I will be posting an update on the SGR situation later today. But let’s just say for now that SGR was not created by this Congress or this administration. It is a flawed and unworkable policy that was inherited by the current administration and Congress, and the current effort by the Senate leadership and the White House to repeal the SGR represents a necessary and good faith effort to start over and create a better system for updating physician payments and to be honest that paying doctors a fair fee will cost Medicare more money than allowing the cuts to go into effect.

Unknown said...

I apologize for any offensive comments. Blunt speech is sometimes necessary to get others' attention. I am deathly afraid the College is being co-opted. I do not mean to mount personal attacks on anyone but, if necessary, to wake people up. I think the College needs to speak out clearly about the abuses to ourselves, our practices, and most importantly, our patients. I will not post here again. Good luck and God bless us all.