Medicare Fee Cut Delayed, but at What Price?
There’s always next year.
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This seems to be Congress’s mantra when it comes to addressing the sustainable growth rate (SGR) formula that each year calls for larger and larger cuts in Medicare reimbursement to physicians. With Congress’s latest SGR-related vote on February 17, the 27 percent payment reduction scheduled for March 1 is now postponed until January 1, 2013. By that time, however, the mandated cut is likely to be about 32 percent.
While the latest in a string of annual delays may be good news for physicians in the short term, the only solution to the problems caused by this long-troublesome formula—and the failure to fix it—according to APA and other medical groups, is a permanent repeal of the SGR formula.
“Every year that Congress puts off repealing the SGR just adds to the final cost,” said APA Medical Director James H. Scully Jr., M.D., in a statement following the recent congressional maneuver. “We are also deeply concerned that the ‘doc fix’ is paid for by cutting bad debt and disproportionate-share payments to those hospitals that are caring for the nation’s indigent patients.”
Specifically, the latest SGR postponement would be financed by the following health care offsets:
$6.9 billion from reimbursing hospitals and skilled nursing facilities that incur debt from treating beneficiaries who do not or cannot pay their share of services.
$5 billion from a program created by the Affordable Care Act (ACA) to support prevention and public-health initiatives.
$4.1 billion from the Medicaid Disproportionate Share Hospital allotment program.
$2.7 billion from clinical laboratory service payments.
$2.5 billion from elimination of a fund established under the ACA to support Louisiana’s loss of Medicaid dollars resulting from federal support for Hurricane Katrina recovery efforts.
Additionally, Congress has approved discontinuation of the 5 percent “bump” in payment for Medicare psychotherapy services, which was extended several times over the past four years.
So, how can the government pay for a permanent fix? Last October, APA joined Reps. Michael Burgess (R-Texas) and Gene Green (D-Texas) in rejecting the Medicare Payment Advisory Commission’s proposal to replace the SGR with a payment structure that would separate primary care clinicians from clinicians providing specialty care.
Under that plan, primary care professionals would have seen their reimbursement rates frozen from 2012 to 2022, while specialty care providers’ rates would have declined by 5.9 percent each year from 2012 to 2014 before being frozen from 2015 to 2022.
The recommendation of APA, the AMA, and more than 100 cosigning medical groups in a January 23 letter to House Ways and Means Committee Chair Dave Camp (R-Mich.) was that Congress offset the cost of a full SGR repeal with excess funds that had been planned for overseas operations like the wars in Afghanistan and Iraq, which would otherwise go unused.
“We agree that our nation faces significant fiscal challenges, and that Medicare is not immune,” wrote APA and its cosigners. “However, it is impossible to implement commonsense programmatic reforms while an immediate and constant threat of massive cuts hangs over the program.”
The text of APA’s cosigned letter to Rep. Camp is posted at www.ama-assn.org/resources/doc/washington/medicare-sgr-sign-on-letter-23jan2012.pdf. 
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Published online: 16 March 2012
Published in print: March 16, 2012
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