The Medicare SGR: Congress Places Another Band-Aid

January 4, 2013
J. Scott Litton, Jr, MD

The difficulty imposed on primary-care physicians as a result of the imperfect Medicare SGR formula creates more hurdles in our day-to-day work flow.

As a new year begins, physicians in practice are becoming very accustomed to the ever famous patch placed on the Medicare Fee Schedule. Enacted in 1997 as a means of controlling healthcare spending, the Medicare Sustainable Growth Rate (SGR) formula adjusts reimbursements to practices and hospitals as a method of controlling the costs of caring for our nation's senior and disabled citizens. The recommendation for 2013 was to decrease the reimbursements by 26.5 percent. A patch, or Band-Aid, has been passed by Congress each year since 2003 to prevent such a reimbursement decrease.

Not only is the scheduled decrease in reimbursements a dreaded sight for those of us in medical practice, it can also potentially lead to decreases in payments from commercial insurance payers. Most insurance companies base their payments to physicians and hospitals as a percentage of Medicare reimbursements. If the decrease in payments is allowed to come to pass, after the two month Band-Aid provision expires, it can lead to decreases in payments from other sources as well. Such a decrease in payments can be financially catastrophic to medical practices.

The SGR formula is in need of a replacement. As we are threatened with payment decreases, medical practices are not able to effectively plan for expansion of services. We cannot plan to hire additional staff and the possibility of accepting new patients with Medicare can be risky. At a time when our nation is faced with grim economic outlooks, and as practices plan to absorb a projected 30 million additional patients as a result of the passage of the Affordable Care Act, medical practices are left scratching their heads and wondering what to do next.

In my practice, we have a large panel of Medicare patients. While I will not ask any of our current patients to seek care elsewhere, I can assure you that the rate at which our practice accepts new patients with Medicare will almost certainly decline. To make matters worse, most of the general population does not correctly understand the ramifications of such imperfect legislation. Physicians have historically been viewed as wealthy. While physicians certainly do enjoy a lifestyle that is above the average for most, the task of operating a practice efficiently and effectively is very challenging. As many graduating medical students are electing to choose careers outside of primary care, the relative decline of primary-care physicians in the medical workforce makes the large task of providing health maintenance screenings for the general population even more difficult.

What is the solution? The most obvious solution is to replace the SGR with a permanent fix that allows for Medicare reimbursements to track the current rate of inflation. How is this fix paid for? That is an even bigger challenge, as our nation's debt is growing at a rate never before seen in our history.

I chose primary care as a career because I feel that I have been given the talent of providing such care to my patients. However, as each year passes, the difficulty imposed on primary-care physicians as a result of the imperfect legislation creates more hurdles in our day-to-day work flow.

One can only hope that the SGR formula will be permanently replaced this year so that practices can effectively plan a method to effectively care for the large number of new patients destined to be added to our panels next year.