MedPAC Votes to Kill SGR

Margaret Dick Tocknell and John Commins , October 7, 2011

The Medicare Payment Advisory Commission on Thursday voted to repeal the contentious  sustainable growth rate formula and replace it with a controversial plan that would include reimbursement cuts to specialists and pay freezes for primary care physicians.

MedPAC is charged with advising Congress on Medicare payment policy issues, including reimbursements to physicians, hospitals, labs and imaging centers. SGR was put in place as part of the Balanced Budget Act of 1997 to help control Medicare spending. It soon became apparent that significant cuts in physician reimbursements would be required to help reduce spending.

Typically Congress has ignored MedPAC's payment reduction recommendations. It's been 10 years, for instance, since Congress has actually enacted any cuts to physician reimbursements.

Now the proverbial chickens are coming home to roost. Unless some action is taken before  Jan. 1, 2012, Medicare payment rates for physicians will drop by 29.4%. In the current political climate, however, Congress and President Obama are unlikely to intercede and delay the cuts as they have in the past.


MedPAC has proffered a plan that calls for $335 billion in reimbursement reductions over 10 years. The so-called "doc fix" will account for $100 billion. Specialist would see their reimbursement rates reduced by 5.9% each year for three years and then frozen for seven years. PCP reimbursements would remain unchanged for the next 10 years.

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3 comments on "MedPAC Votes to Kill SGR"

carol (10/10/2011 at 3:26 PM)
If doctor's fees are capped for 7 years after they have been reduced by 5% or so a year for the previous 3, will the staff also be willing to have their salaries capped? Many physician practices are small business' that will be impacted by reduced income which will affect and their ability to provide benefits and salary increases to their staff. Additionally they are being asked to impliment many other levels of government regulation. What about the cost of real estate and utilities? Will all of those be capped too? I am wondering why the best and brightest will consider going into medicine?

steve (10/7/2011 at 2:07 PM)
Specialist rates are now exactly the same as primary care rates. If a cardiologist sees a new patient for a level 4 new patient visit the fee is exactly the same as it would be for a family practitioner who save a new level 4 case. So, three years from now, the cardiologist would get 18% less than the family practitioner for the same level of visit. Does that sound reasonable. I guess it will discourage specialization. But it also will discourage cardiologists from accepting any Medicare patients. Or, they will stop doing patient care altogether and just concentrate on procedures. But perhaps that's a good thing. I don't really know.

Michael Samms (10/7/2011 at 10:50 AM)
It is sad that the proposed MedPAC "Doc Fix" includes indiscriminate across-the-board reimbursement freeze for Primary Care Services and annual indiscriminate across-the-board reimbursement decrease in Specialist Services. Why do regulators continue to put forth reimbursement fixes that addresses over-served and under-served areas of the country equally. It's unfair and mind-numbing. What methodologies can healthcare payers utilize that will improve healthcare quality while simultaneously lowering costs? One method recently identified is a scoring process, (see In her book, Overtreated, Shannon Brownlee states, "...medicine does not function like other economic markets. If doctors found they weren't getting enough business, they didn't have to slash their fees in order to attract new patients; they could simply give more medical care to patients they already had..." The Scoring process: If a provider has not performed a diagnostic test within the previous 12-months, the provider must apply for a score. A score is issued using complex algorithms that are based upon existing supply and capacity within a defined geographic region. Payers will alter reimbursement based upon the score. This process does not interfere with the sacred physician-patient relationship and does not deny any patient any needed service. Once the scoring process is fully deployed and the reduction in artificial demand creation has subsided, fewer redundant and unnecessary diagnostic services will be provided. The overall U.S. healthcare system will benefit from reduced costs. The healthcare scoring innovation will save $944 billion over the next 10 years in the U.S. healthcare system.




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