Healthcare Business News

Still no fix for SGR

Pay cuts prevented, but move irks docs, hospitals

By Jessica Zigmond and Rich Daly
Posted: February 18, 2012 - 12:01 am ET

Congress disappointed physicians, annoyed hospitals and made more work for themselves over the long term as lawmakers once again failed to find a permanent solution to the complicated and universally unpopular Medicare physician payment system.

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Late last week, the House and Senate passed the Middle Class Tax Relief and Job Creation Act of 2012, a legislative package that includes a provision to prevent a 27.4% cut in Medicare physician payment rates that was scheduled to take effect March 1.

The measure freezes the rates at their current level through Dec. 31, 2012, and also requires HHS and the Government Accountability Office to submit reports to help members of Congress develop an alternative to the sustainable growth-rate formula, which is used to determine payment rates.

“Physician practices now face a mounting 35% payment threat from Medicare in 2013, and Congress has dug itself into a $400 billion hole,” Dr. Susan Turney, president and CEO of the MGMA-ACMPE, formerly the Medical Group Management Association, said in a statement. Group practices have told the organization that this decision will inhibit their ability to plan for the future, Turney said.

Just ahead of the Presidents Day recess, House members voted 293 to 132 in favor of the overall package, which was a compromise to legislation the House passed in December. Soon after, the Senate approved the bill in a 60-36 vote. Rep. Phil Gingrey (R-Ga.), a physician who serves as co-chairman of the GOP Doctors Caucus, voted against the bill in part because he wants a long-term fix, a spokeswoman said in an e-mail, but primarily because “the payroll tax extension is not paid for and will add $100 billion to the deficit.”

Rep. Renee Ellmers (R-N.C.) told Modern Healthcare that lawmakers will continue to work on the physician payment issue. “We have got to come up with a permanent fix to the SGR, which is basically, change the system,” Ellmers said.

Meanwhile, House Ways and Means Committee Chairman Dave Camp (R-Mich.), who served as chairman of the conference committee that worked on the compromise, emphasized that the bill includes how to pay for the temporary fix. “Preventing a massive cut in doctor reimbursement rates costs money, and we found that money not by borrowing or taxing more, but by repealing and defunding wasteful portions of the Democrats' healthcare law,” Camp said in a statement.

To help offset the cost of the bill's roughly $21 billion (over 10 years) in Medicare spending, the agreement calls for about $11.6 billion in spending reductions from the Patient Protection and Affordable Care Act, including about $5 billion in reductions to the Prevention and Public Health Fund.

Senate Finance Committee Chairman Max Baucus (D-Mont.) said he is not concerned that the Affordable Care Act cuts will set a precedent for the act being used to fund other priorities. “The ACA is virtually intact,” said Baucus, who served as co-chairman on the payroll conference committee.

The bill also extended certain Medicare programs that were set to expire. A provision to extend higher wage payments to facilities known as “section 508 hospitals” will be extended to March 31 and then phased out. Another provision extends the outpatient hold-harmless payments for eligible rural hospitals and sole community hospitals with fewer than 100 beds through Dec. 31.

Richard Pollack, executive vice president at the American Hospital Association, said the AHA is displeased with a provision in the bill that subjects hospital outpatient departments to spending caps that have been in effect since 2006.

Hospitals will also take a hit in the area of bad-debt payments that compensate for uncollectable cost-sharing owed by Medicare beneficiaries.

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