One day after announcing the American Medical Association's support for two healthcare reform bills in the House, AMA President J. James Rohack, MD, told an audience of business executives that a failure to fix the sustainable growth rate formula could lead to a "crisis of access."
Speaking at the Harvard Business School Health Industry Alumni Conference, Rohack stressed the importance of H.R. 3961, a bill that eliminates the sustainable growth rate formula in Medicare that will mandate a 21% cut in reimbursements this January. Although another bill, H.R. 3962, contains the majority of proposed healthcare reform changes, passing one without the other would send mixed messages about reform, he said.
A similar bill to revamp the SGR formula failed in the Senate last month when legislators balked at its cost of more than $240 billion. Congress could have made the change years ago for a much smaller price tag, but each year the problem becomes more costly to fix, he said.
The SGR was implemented in 1997 with the intent of keeping physician payments from growing out of control by tying them to the growth of the overall economy. When the economy showed strong growth the first few years after the SGR passed, increases in payment per beneficiary kept up. However, as the economy slowed, healthcare costs continued to skyrocket, but the SGR system prevented physician payments from keeping pace.
The result has been a dramatic swing in practice economics. Physician payment has remained virtually unchanged, but practice costs have grown enough that physicians are already receiving nearly 20% less than they would have been if reimbursement levels weren't hindered by the SGR formula, Rohack said.
If another 21% payment cut is added to that in January, physicians might not only limit the number of Medicare patients they see, but many my choose to retire, he explained.
"Many physicians who are providing care to Medicare beneficiaries are 65 and older already. Once that stock market gets back to a particular level, and you got a 21% cut on top of 20% decrease already, you don't have to have a Harvard MBA to know that won't work."
Although the House is scheduled to take up H.R. 3961 soon, the Senate has not as of yet included a permanent repeal of the SGR formula in its healthcare reform legislation. Instead, the current Senate proposal would prevent the upcoming 21% payment cut from kicking in, leaving a longterm solution to be dealt with next year.