Congress defers permanent SGR overhaul in search of multiyear fix

Physician organizations acknowledge that a permanent solution is not politically feasible now but pledge to keep the pressure on lawmakers.

By Chris Silva — Posted May 31, 2010

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A number of physician organizations and the Obama administration came out in support of a plan to prevent Medicare physician pay cuts for the next 3½ years, putting off action on a permanent solution.

At this article's deadline, lawmakers were still debating a proposed amendment to an unemployment assistance and tax extenders bill that would prevent any scheduled Medicare cuts through 2013 and replace at least some planned reductions with positive pay updates. At least one fiscally conservative Democrat suggested that this fix might be shortened by at least a year before Congress could approve it.

Delays in floor consideration in the House meant less time for the Senate to act before lawmakers' planned May 28 recess for a Memorial Day break. Congressional leaders had not ruled out pursuing a shorter-term Medicare pay measure if it appeared action would not be finished by June 1, when the 21% pay cut was scheduled to take effect. Lawmakers already have allowed the cut officially to take effect twice this year before reversing it.

If approved without changes, the multiyear plan would replace the 21% cut with a 1.3% Medicare doctor pay increase for the remainder of 2010, followed by another 1% raise for 2011.

Physicians would not face cuts in 2012 and 2013, and rates also could increase in each of those years under a modified payment formula. The proposed two-tier modification would make it more likely that pay for primary care services would be eligible for raises, even if rates for other services remain frozen. Starting in 2014, the system would revert to the current sustainable growth rate formula unless lawmakers pass legislation to stop the cuts from returning.

The plan gained the support of AARP, which, along with the American Academy of Family Physicians, the American College of Physicians, the American Osteopathic Assn. and the Military Officers Assn. of America, called on Congress to approve the legislation.

The bill would help preserve access to doctors for Medicare beneficiaries until 2014, the organizations said.

"We are confident that policies such as those contained in [the legislation] will result in physicians continuing their participation in the Medicare program, preserving access to care for our nation's seniors and military families," said Larry A. Wickless, DO, the AOA's president.

Special consideration for primary care also represents a step in the right direction, some organizations said.

"Primary care physicians will increasingly be called on to care for Americans with improved access to health insurance," said AAFP President Lori Heim, MD. "This bill helps restore the trust needed to build a health care system based on primary care."

Full repeal "apparently not feasible"

The American Medical Association has been calling on lawmakers to scrap permanently the SGR formula that helps determine Medicare pay, and it expressed disappointment that Congress would not be able to enact such a plan this year.

"Achieving full repeal of the payment formula is apparently not feasible at this time," said AMA President J. James Rohack, MD. Adding that the temporary fix "treats the symptoms -- it's not a cure for the disease," he insisted that the AMA would keep pushing for permanent reform well in advance of any new deadline.

Dr. Rohack noted that Congress could have permanently solved the problem five years ago at an estimated 10-year cost of $49 billion. The price tag now, according to a recent score from the Congressional Budget Office, would be $276 billion over 10 years. If not fixed, the AMA warns, the cost of a full overhaul would top the $500 billion mark within the next five years.

"Lawmakers must realize that the underlying policy problem will return larger than ever in 2014," Dr. Rohack said of the 3½-year congressional proposal. "Future Medicare cuts will severely undermine health system reform initiatives that aim to optimize the quality of patient care as physicians find they cannot afford to participate in Medicare."

Groups that backed the temporary solution said doing away with the SGR is vital to Medicare's survival.

The 3½-year provision offered by lawmakers falls short of repeal, said ACP President J. Fred Ralston Jr., MD, whose organization came out in strong support of the multiyear plan. The ACP is committed to working with Congress to ensure that a new payment framework is permanently enacted into law before payments revert back to the SGR, he said.

White House support

The Obama administration also voiced its support for the multiyear payment proposal. In a May 24 statement, the White House said President Obama "has long supported comprehensive, fiscally responsible reform of the physician payment formula to improve the quality of care." The Medicare provision "represents significant progress toward that goal."

Some lawmakers that support long-term reform also said the Medicare physician pay provision is a good first step. One of them is Rep. Chris Van Hollen (D, Md.), assistant to the House speaker.

"Congressman Van Hollen strongly supports long-term SGR reform to ensure a fiscally responsible and fair solution for physicians who serve our seniors," said Bridgett Frey, the lawmaker's spokeswoman. "He believes that the way it has been addressed in the [bill] puts us on a path to a permanent solution."

Before turning to the 3½-year plan, House leaders had entertained the idea of a five-year freeze of physician rates starting in 2011, estimated to cost $88.5 billion over 10 years. But key fiscal conservatives in both houses balked at the price tag, and leaders scaled back the physician pay package, bringing the estimated 10-year cost down to about $63 billion.

However, Senate Budget Committee Chair Kent Conrad (D, N.D.) said at this article's deadline that the proposal might be too broad. He said lawmakers might need to shorten the package's length by at least a year before it could clear the Senate.

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