Thursday, February 20, 2014

Repeal the Medicare Sustainable Growth Rate (SGR)

Decreasing Medicare reimbursement has made it increasingly difficult for Medicare patients to find a doctor who will see them. For many people, this can be a major barrier to attaining care, especially when transportation becomes an issue. One of the reasons for this problem is that the payment formula is flawed. Since 1992, Medicare has reimbursed physicians on a fee-for-service basis. In 1997, Congress implemented the SustainableGrowth Rate (SGR) to control Medicare spending and make sure that growth in physician reimbursement does not exceed the growth in GDP. This has not worked because the cost of medical care has increased faster than GDP; health careexpenses currently make up 18% of GDP, while in 1998 it was 13.4%. Congress has had to continually override the SGR because of concerns that reduced payments to physicians would limit patients’ access to care.

Each year, the Centers for Medicare and Medicaid Services (CMS) sends a report to Congress about the previous year’s costs as well as a conversion factor that will change the payments for physician services for the next year in order to match the target SGR. For example, if 2013 expenditures exceeded the target (which they did), then the conversion factor will decrease payments for 2014. If the expenditures were less than expected (guess how many times that has happened), the opposite would happen. These changes take place on March 1 every year. As it stands, without congressional action Medicare physician services face a 23.7% cut on April 1 of this year. Furthermore, if the trend continues, it is projected that average 2021 Medicare payments will be just half of what they were in 2001 (adjusted for inflation).

There is currently joint legislation to repeal the SGR (H.R. 4015/S. 2000). The SGR Repeal and Medicare Provider Payment Modernization Act will allow for a more stable Medicare physician payment policy that better serves Medicare patients. The current system with SGR is flawed and unsustainable. Tell your members of Congress to vote as soon as possible in support of repealing the SGR formula and reforming the Medicare physician payment system.