Permanent SGR 'Doc Fix,' Medicaid Reimbursement Increase Proposed

Here’s some good news for physicians: Two proposals released last week could lead to higher reimbursement.

One would eliminate the flawed sustainable growth rate (SGR), which is used to determine payments for physicians’ services under Medicare; the other would increase Medicaid payments to physicians.

The SGR Fix
If unaddressed, physicians will experience a roughly 30 percent cut to payment for Medicare services in 2013 due to the SGR.

Two congressional members, Rep. Allyson Schwartz (D, Pa.) and Rep. Joe Heck, MD (R, Nev.), recently introduced a bill in hopes of avoiding that.

The bill, dubbed the Medicare Physician Payment Innovation Act of 2012, appears to be a win-win for doctors. Not only would it eliminate the SGR, it would also increase Medicare pay to physicians from 2014 through 2017 and in doing so, reduce payment disparities between physicians of different specialties.

Medicare payments for services would increase 2.5 percent each year for primary care, preventive, and care-coordination services, while rates for all other physician services would increase by only 0.5 percent each year, according to Medscape.

Yet eliminating the SGR comes with a heavy price tag - an estimated 300 billion. Supporters of the bill propose offsetting that cost by using the savings from the reduction in military operations in Iraq and Afghanistan, according to Becker’s Hospital Review.

But that’s not all. The bill would also play a role in phasing out traditional fee-for-service reimbursement. In 2019, physicians who have not yet switched over from traditional fee-for-service to value-based reimbursement models - like accountable care, Patient-Centered Medical Homes, and shared savings - would experience pay cuts, according to Medscape.

Family physician and AAFP President Glen Stream said the bill is a step in the right direction.

“This legislation begins the transition to a sustainable payment system and helps our complex system better recognize the value of primary medical care,” he said in a news release. “By providing a 2 percent higher payment rate for primary-care services for the next several years, this bill improves the environment for currently practicing physicians.”

But not everyone is so optimistic. Late last year, a similar SGR fix was floated before the congressional super committee. During a December 2011 floor speech, Sen. Jeff Sessions (R, Ala.) called the approach a fallacy that should not be considered acceptable by his colleagues.

"Everybody knows the war costs are going to be coming down, and we've been planning for that,” he said, according to American Medical News. “You can't assume that money will be available to spend willy-nilly.”

Medicaid Payment Increase
HHS announced a proposed rule that would implement new requirements for increased reimbursement for primary-care physicians who treat Medicaid patients.

The new requirements, originally outlined in the Affordable Care Act, would push Medicaid rates to the same level as Medicare rates in 2013 and 2014. The increases apply to specified primary care services provided by family, general internal medicine, and pediatricians. 

“As we move towards [calendar year] 2014 and the expansion of Medicaid eligibility, it is critical that a sufficient number of primary-care physicians participate in the program,” the proposal states. “[The Medicaid payment increase laid out in the health law] will encourage primary care physicians to participate in Medicaid by increasing payment rates.”

According to the Washington Post, the pay increases could total as much as $5.5 billion each year. The increase would be 34 percent, on average.

But there is a catch. The payments would end after 2014, just when physicians will see an influx of new Medicaid eligible patients.

Do you think either of the proposals will become a reality?