Ken PerezWeight loss is the perennial top New Year’s resolution for Americans. And you could say it has been perennially at the top of the New Year’s wish list for physician groups for the past decade or so: Physicians would like nothing better than to see Congress take a weight off their shoulders and repeal the Medicare sustainable growth rate (SGR).

In early December, Democrats and Republicans reached agreement on a bipartisan budget deal that included a three-month “patch” that staved off a roughly 24 percent decrease to the physician fee schedule (PFS) that was to be imposed on Jan. 1, 2014. That short-term “doc fix,” which raised PFS rates by 0.5 percent, bought Congress some time to come up with a permanent solution.

On Dec. 12, 2013, the House Ways and Means Committee and the Senate Finance Committee both approved bills that would reform the SGR. The House bill, the Medicare Patient Access and Quality Improvement Act of 2013 (most recently titled the SGR Repeal and Medicare Beneficiary Access Act of 2013), was approved by a vote of 39-0. The Senate bill, the SGR Repeal and Medicare Beneficiary Access Improvement Act of 2013, was approved by a voice vote. Neither bill has been approved by the entire chamber in either the House or the Senate, but it is likely that some synthesis of the two pieces of legislation will be produced as a single bill that will be considered by both houses of Congress.

What can we hang our hat on regarding a permanent doc fix? I think four points are solid bets.

First, PFS rates will rise only slightly or not at all going forward. The bill approved by the House Ways and Means Committee specifies 0.5 percent annual increases for 2014-16, no increases for 2017-23, and 1.0 percent annual increases starting in 2024. The bill approved by the Senate Finance Committee freezes rates thru 2023 and specifies 1.0 percent annual increases for 2024 and beyond. 

Second, it is clear that alternative payment models—e.g., accountable care organizations and patient-centered medical homes—will be encouraged with economic incentives to physicians. Under both the House and Senate bills, eligible professionals participating in such payment models will receive annual bonus payments in 2017-22 equal to 5 percent of the amount paid by Medicare to the eligible professional for the preceding year. In addition, starting in 2024, the annual increase to PFS rates for physicians being paid under alternate payment models will be 2.0 percent, twice the rate increase provided to physicians not being paid under in such models.

Third, a permanent doc fix will cost about $150 billion. The Congressional Budget Office recently pegged the House bill’s 10-year cost at $153.2 billion, while CBO’s preliminary estimate for the Senate bill totaled $148.6 billion, composed of $124.1 billion for repeal of the SGR and $24.5 billion for various extensions and other provisions tacked onto the bill. 

Fourth, unfortunately, neither bill identifies specific sources of funding—so-called “pay-fors” that would cover the increased government spending that repeal of the SGR would entail, allowing the legislation to be deficit-neutral. As we have seen with past short-term SGR patches, the most likely scenario is a robbing of Peter—that is, other players in the broadly defined healthcare sector (e.g., hospitals, pharmaceutical companies)—to pay physician Paul. 

The final point, an outstanding sticking point, needs to be resolved, or else a permanent SGR repeal will yet again become like the vast majority of New Year’s resolutions, which start with good intentions, but end up unfulfilled.  

Ken Perez is a healthcare IT marketing and policy consultant in Menlo Park, Calif. 


Publication Date: Monday, December 30, 2013