SGR Fix: One Size Won't Fit All


Congress needs to act soon to avert a scheduled 27% cut in physicians’ Medicare pay – and find a way to fix the failed system that calls for that cut – but, increasingly, experts say that the solution must be multipronged and adaptable to a variety of practice situations.

One reason that the current system has failed is that it holds individual physicians responsible for group behavior at a national level, according to Dr. Barbara Levy, vice president for health policy at the American College of Obstetricians and Gynecologists. Instead of leading to lower health costs, it actually increases them because the payment system drives physicians to increase their volume to make up for low reimbursement.

The Sustainable Growth Rate (SGR) formula – the mechanism that ties doctor pay to the gross domestic product in an effort to control costs – "was never really useful in terms of accomplishing the goal to bend the cost curve," Dr. Levy said.

Potential alternatives being evaluated provide an opportunity to get the incentives right, she said, and gear the system toward individual, not group, accountability. Payment models, however, will all need to be carefully studied over multiple years, she said, to know for sure if they will work. For instance, good preventive care is expensive in the short term but saves money over time. Looking at just 6 months of data is not enough to see if savings are possible, she said.

Legislation Offers Permanent Fix

One proposal favored by many physicians comes from Rep. Allyson Schwartz (D-Pa.) and Rep. Joe Heck (R-Nev.), an osteopathic physician. The bill (H.R. 5707) would permanently eliminate the SGR and set up a 10-year path to a new payment system.

Courtesy Office of Rep. Allyson Schwartz

Rep. Allyson Schwartz (D.-Pa.), who is co-sponsoring legislation to permanently replace the SGR, in her Capitol Hill office in August.

During the initial years, physicians would receive small pay increases while Medicare officials tested new payment models, with primary care doctors getting slightly more during the transition.

After testing, physicians could choose from among a menu of alternative payment and delivery options. Those who didn’t participate in one of the new quality-based models would see their fee-for-service payments reduced starting in 2019.

Rep. Schwartz said there is an "outside hope" that the bill could be considered during the lame-duck session that follows the Nov. 6 election. If not then, it could come up in early 2013.

Overall, she said that she’s encouraged by the increasing agreement between physicians and lawmakers to move toward innovative payment models.

She advised doctors to keep talking to their members of Congress about the need to adopt a new system that pays adequately for high-quality care. The more bipartisan agreement around that concept, the better, she said.

"There’s no question that physicians should be looking at ways they can participate in new payment models," Rep. Schwartz said.


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