The SGR was enacted as part of the 1997 Balanced Budget Act and linked physician fees to growth in the U.S. gross domestic product. It included a “clawback” mechanism for rolling back fees if spending exceeded the previous year's budget targets. But cutting physician payment has never been a politically popular move. So, starting in 2003, Congress enacted a series of legislative “patches” to prevent the cuts from taking place resulting in deeper cuts being threatened every year which required more expensive patches each time.
Over the past decade, the mounting patches have cost taxpayers $153.7 billion (PDF), according to the American Medical Association.
Few palatable options are on the table to pay for a permanent doc-pay fix. Sen. Ron Wyden (D-Ore.) has introduced bipartisan legislation that aims to lower costs by better coordinating the care for the sickest 5% of Medicare beneficiaries. While the Congressional Budget Office has not calculated or “scored” the savings from the Better Care, Lower Cost Act, the senator claims it could save as much as $25 billion a year, which would probably more than pay for a permanent fix.
“That one has a lot of positive momentum among fiscal conservatives on both sides of the aisle,” Keckley said. But until the CBO releases its own score on the legislation, its attraction as a SGR pay-for would be limited.
The CBO has listed numerous other options in a report released last November. It noted that the tax exclusion of employer-provided healthcare benefits cost the federal treasury $250 billion in 2013. There's an outside chance scaling that back slightly to pay for a doc-fix could gain traction since a recent Republican healthcare reform alternative proposed limiting the tax exclusion to pay for tax credits for the uninsured.
There were 16 healthcare-specific suggestions listed in the CBO report as options for lowering the deficit, not paying for an SGR-repeal. Most are politically charged and would not necessarily produce much benefit.
Raising the Medicare eligibility age to 67 years old, for example, would reduce the federal deficit by $19 billion over the next 10 years, according to the CBO. While savings would be higher for Medicare alone, the total effect on the budget is diminished because costs would merely be shifted to other programs such as Medicaid.
Dr. Robert Berenson, senior fellow at the Urban Institute, said major policy shifts or payment restructuring could be possible as part of an overall Medicare reform package, but not as a one-item budgetary measure. “No one is going to raise the eligibility age to pay for an SGR fix,” he said.
Another deficit-reduction option the CBO scored that would offset the price of repealing the SGR is phasing in higher premiums for Medicare Part B and D. Beneficiaries currently pay $104.90 and $31.70 a month respectively for physician services and prescription drugs. If those figures were elevated to $260 and $63 a month, it would reduce the federal deficit by $274 billion over the next 10 years.
Part D also was targeted in an option that would require drugmakers to pay rebates to Medicare much like they do for Medicaid. According to the CBO, this could knock $123 billion off the federal deficit. Sen. Jay Rockefeller (D-W.Va.) has introduced legislation that would enact Medicare drug rebates for dual-eligible beneficiaries and he has specifically identified his bill as an SGR-repeal pay-for.
But the bill, which Rockefeller said would generate $141.2 billion over 10 years, has sat in committee since last April.
Healthcare consultant Brian Ahier, president of Advanced Health Information Exchange Resources in The Dalles, Ore., noted how the hospital sector is already pushing back against being footed with the SGR-repeal tab and expects the pharmaceutical industry to do the same.
“There could also be proposals for offsets in the pharmaceutical industry such as changes to the Medicare Part D rebate program and perhaps reducing the market exclusivity period for biologics—but the pharmaceutical industry would lobby hard against that,” Ahier said. “No matter what the proposal, there will be opposition, and this being an election year, I expect campaign coffers from all sides will benefit from the debate.”