Growing Price Tag for SGR Fix
The Congressional Budget Office has released its Budget and Economic Outlook report, which estimates that the cost for repealing the current sustainable growth rate (SGR) formula is $316 billion over ten years, up from a $290 billion price tag from late last year. The cost of fixing the SGR has continued to grow since its inception due in part to the flawed and cumulative nature of the formula. The AGA and all of organized medicine continue to advocate that Congress repeal the SGR and replace it with a system that is more stable and equitable.
A recent New England Journal of Medicine article, “The Sources of the SGR ‘Hole’,” addresses many of the flaws of the SGR formula, such as how the behavior of a physician in Texas impacts the behavior of a physician in Minnesota. Under the SGR, all physicians are rewarded and punished the same way, which is why many policy makers have been advocating for a value-based system under which physicians are given more incentives to provide higher quality and efficient care. The authors state that a new physician payment model should emphasize bundled payments and episodes of care to “give provider organizations and physicians the incentives to capture gains from eliminating lower-value therapies and delivering higher-value health care.”
Despite many of the new payment model ideas that have been discussed over the past few years, there is still the issue of the SGR “debt” and how we dig out of this hole. The AMA and many Democrats have been arguing that Congress repeal the SGR and write off the debt with the unused overseas contingency operations funds — funds that would have been used in the wars in Iraq and Afghanistan. However, many House Republicans are not comfortable with using this approach since they believe it is an accounting gimmick. Physician groups have argued that the SGR debt is also an accounting gimmick since Congress would never allow a 27.5 percent cut to be implemented. The idea is still being floated, but at this juncture, it is a long shot at best that Congress would use some of these funds to offset the SGR debt.
As the conferees to the Middle Class Tax Cut Act (which included a two month “doc-fix” that expires Feb. 29) discuss the length of the next fix, the AGA and the Alliance of Specialty Medicine continue to call on Congress to provide physicians with a long term fix to the SGR.
Look for more updates on this critical issue on the AGA Washington Insider.
