Medicare SGR –
It’s All About the Money
Ronald Szabat, J.D., LL.M., Director
Governmental Affairs and General Counsel
hroughout 2005, ASA has worked long and hard to
keep the urgent need for reform of the Medicare
Sustainable Growth Rate (SGR) formula at the forefront
of our legislative agenda. As our members have repeatedly
said in Hill visits, faxes and e-mails to our federal
legislators: absent Congressional or Administration
action, physician Medicare payments will be cut
4.4 percent on January 1, 2006, and by similar amounts
for many years to come. They have made the compelling
point that this is simply unfair and completely
unacceptable.
Based on the operation of existing law, the current
Medicare SGR formula literally holds physicians
financially accountable for collective annual increases
in patient demand for medical care that exceeds
the 10-year average growth in the nation’s
Gross Domestic Product. Many learned policymakers,
including the Medicare Payment Advisory Commission,
have advocated scrapping this system in favor of
Medicare expenditures tied to the rise in actual
medical expenditures, the proxy for which would
be growth in the Medical Economic Index. Still others,
including Centers for Medicare & Medicaid Services
Administrator Mark B. McClellan, M.D., Ph.D., have
proposed moving to a system of rewards for “improved
quality” as a possible way to rationalize
future Medicare updates and avoid cuts.
Once again, enormous time and effort have been committed
to arguing against the unsustainable nature of the
Medicare growth rate formula. In particular, ASA’s
efforts have highlighted the fact that cuts for
anesthesia services would hit anesthesiologists
particularly hard because of the already unacceptably
low conversion factors that are applied to these
Medicare services.
Fortunately, our efforts have not been alone. We
have actively joined ranks on a continual basis
with the entire spectrum of physicians across organized
medicine and worked closely with the American Medical
Association (AMA) on this important issue. Together,
we have lobbied Congress on a bipartisan basis and
forcefully brought our message to the Bush Administration.
In short, ours has been a textbook campaign of educating
decision-makers about the need to bring increases
in Medicare physician Part B spending more in line
with the realities of the medical marketplace, keeping
faith with our nation’s commitment to the
Medicare elderly and disabled.
Recently, the U.S. Senate took a welcome step to
avert cuts for 2006 by including a provision in
its budget reconciliation bill that would apply
a 1 percent Medicare update for 2006. The price
tag for this one year fix, which would actually
increase Medicare physician fees from the baseline
by 5.4 percent, would be $10.8 billion over a five-year
budget window. While this provision was a highly
welcome development in a bleak legislative year
for the future funding of the Medicare program,
unfortunately it was not a carrot without a stick.
Tied to this potentially positive Senate update
was a highly problematic pay-for-performance provision
that could lead to cutbacks on top of the SGR cuts
in 2007 and beyond. Organized medicine has been
uniform in rejecting any tying of the untested notions
of “pay-for-performance” to future Medicare
payments until the SGR formula is fixed permanently.
Following Senate action, House Republicans continued
working hard to muster a narrow margin to pass their
own version of the budget reconciliation bill, but
there was near uniform opposition to the inclusion
of any Medicare provisions in it whatsoever.
As Congress moved toward a two-week Thanksgiving
recess, the exact fate of an impending budget reconciliation
conference between the House and Senate remained
in limbo. Thus the fate of the SGR formula’s
application to the Medicare physician update for
2006 remained undecided at press time. For
its part, ASA remained in lockstep with organized
medicine in seeking a two-year positive update for
all physicians, with success by no means guaranteed.
Given this ongoing dilemma, the fight for a permanent
SGR fix must continue. As it does, ASA and
like-minded physician organizations, including AMA,
will continue to work with those in Congress who
understand that our nation’s health care for
the elderly must be placed on a secure footing.
All physicians must continue to join in this important
educational effort of our federal lawmakers.
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