High price tag on plans to fix Medicare pay for docs: CBO

Some proposals to replace Medicare’s physician payment formula would cost hundreds of billions of dollars over the next 10 years, according to a document from the Congressional Budget Office. The document, which provides new estimates on various proposals to change physician payment rates, reveals that the most costly options would come from replacing or restructuring Medicare’s sustainable growth rate, or SGR, formula, which is based on the health of the economy and has been threatening cuts to physician payments for at least six years. Physicians in 2010 face a 21% cut to their Medicare payments unless Congress intervenes. The most expensive option outlined in the CBO estimate would involve setting the update based on the Medicare Economic Index, or MEI, through 2019, a measure that would cost the program more than $344 billion over 10 years. The CMS defines the MEI as a measure of inflation faced by physicians with respect to their practice costs and general wage levels. Another option would be to remove outpatient drugs from the SGR formula both retrospectively (from 1998) and prospectively, which the CBO projects would cost Medicare $87.5 billion through 2019. Removing these drugs just prospectively, however, would actually save $9.6 billion over this time period.