Proposed SGR Fixes
There was general acceptance among the group that the SGR had never worked quite the way it was expected to. Among the shortcomings and suggested fixes:
SGR objectives are inconsistent with the incentives it produces. In her statement, Wilensky noted that individual physicians and groups are "implicitly encouraged to increase spending, because nothing they can do as individuals will affect overall spending, but their fees will be affected by what other physicians do collectively, irrespective of their own behavior."
Suggested fix. Set the SGR at the level of a physician's practice. Wilensky says that would link physician updates to physician behavior. She sees it working for larger group practices but it would be a problem for individual and small group practices because of the adjustments that would be needed for to correct for atypical patients.
SGR is fundamentally irrational. Vladeck said he was shocked that in 2011 the difference between the targets the SGR produces and the actual Medicare outlays since SGR was enacted was less than $13 billion, or about 1.2% of the total outlays. "There is something fundamentally irrational about a formula that requires a reduction of 27% from physicians to recoup a difference of just over 1%. A similar logic applied to an ordinary commercial obligation would violate every anti-usury law I've ever seen."
Suggested fix. Vladeck said Congress needs to acknowledge the SGR mistake, repeal it, and replace it with an update factor similar to what is applied to other Medicare providers such as hospitals, ambulatory surgical centers or home health agencies.