Healthcare Business News

Senate Finance Committee slates session on SGR as time for finding fix runs short

By Andis Robeznieks
Posted: November 22, 2013 - 11:45 am ET

With time running out to prevent a major pay cut for doctors, the Senate Finance Committee scheduled an “open executive session” for Dec. 12 to discuss repealing and replacing the Medicare sustainable growth-rate physician payment formula.

Democratic and Republican House and Senate leaders had released a draft proposal of legislation that contains elements physicians are not thrilled with—such as a 10-year payment freeze and certain quality measures.

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But if Congress does not act, an SGR-driven 24.4% Medicare pay cut is set to take effect Jan. 1.

The legislation “would end the SGR's annual cycle of uncertainty and protect seniors' access to their doctors,” the Senate committee's leaders—Sen. Max Baucus (D-Mont.) and Sen. Orrin Hatch (R-Utah) said in a media advisory (PDF). “It would also help shift Medicare away from the inefficient fee-for-service payment model by rewarding the value of care over volume.”

The cost of replacing the SGR has been projected at $138 billion, a significant decrease from a previous estimate of $297 billion because of slower projected growth in Medicare spending. The proposal, however, doesn't mention a means to cover that cost, and Baucus and Hatch said they would “address offsets for the legislation separately.”

While physician organizations are pleased to see movement on replacing the SGR, there is concern that Congress won't complete the task by year's end. “The timing is really cutting it down to the wire with a looming 25% cut set for Jan. 1,” said Anders Gilberg, senior vice president for government affairs for the Medical Group Management Association.

The American Medical Association House of Delegates held its interim meeting Nov. 16-19 just outside Washington at the Gaylord National Resort and Convention Center in National Harbor, Md., and the AMA's president, Dr. Ardis Dee Hoven told delegates that doctors must remain at the negotiation table, despite their misgivings over parts of the deal.

“The proposal before us is a mixed bag,” Hoven said in a speech. “I'm not going to sugarcoat it—there are things I really don't like about the proposal: Chief among them, the idea of a 10-year payment freeze.”

Hoven said the freeze “doesn't make sense” because Medicare payments are currently 20% below the cost of delivering care. “It makes you want to throw up your hands and scream,” Hoven said. But, she said, “walking away right now would be a colossal mistake.”

Given Washington's current state of dysfunction, the fact that the Congress was able to come up with a bipartisan, bicameral proposal is in itself an incredible accomplishment and “proof of the widespread recognition that the SGR has to go,” she said.

A freeze would do away with the regular chaotic cycle of looming decreases and last-minute fixes, which included five temporary legislative “patches” to suspend SGR-driven pay cuts in 2010 alone.

“No more annual threats,” Hoven said. “No more patches. No more sword of Damocles dangling over our heads.”

On Nov. 19, AMA members and delegates from 35 states met with Congressional leaders to advocate for a permanent SGR replacement.

Amid a flurry of work on the SGR in this session by several lawmakers in the House and Senate, few have floated ideas that would pay for the fix.

Sen. Jay Rockefeller (D-W.Va.) said his bill to bring back drug rebate pricing for dual eligible beneficiaries could save the Medicare system $141.2 billion over 10 years and that could pay for SGR replacement. The bill, however, is opposed by the Pharmaceutical Research and Manufacturers of America, and no action has been taken since the senator introduced it back in April.

Follow Andis Robeznieks on Twitter: @MHARobeznieks

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