Senator's Bill Proposes Alternative Plan for Medicare Reimbursements

October 7, 2010

With all the debate about how to deal with pending Medicare reimbursement cuts linked to the Sustainable Growth Rate (SGR) formula, one legislator says the answer is simple: ditch the payment system altogether.

With all the debate about how to deal with pending Medicare reimbursement cuts linked to the Sustainable Growth Rate (SGR) formula, one legislator says the answer is simple: ditch the payment system altogether.

Sen. Blanche Lincoln (D-Ark.) has introduced the "Medicare Rural Physician Recruitment and Retention Act of 2010," a bill that would do pretty much as its title indicates, with the goal of ensuring seniors access to the doctors they want to see.

One of the big parts of the bill calls for the repeal of the SGR payment system to the nation's physicians and instead, basing annual updates for doctors on what the senator calls "a more accurate measurement of the increased cost of providing care," the Medicare Economic Index (MEI).

Created in 1975, the MEI is a measure of practice cost inflation tied to the SGR as a way to estimate annual changes in operating costs and earnings levels for physicians. In a 2008 report, the AMA's Council on Medical Service said the MEI "provides a promising framework for medical price increases," but also noted design flaws in the formula to be addressed.

But, depending on whom you ask, the SGR itself is seen as flawed, so perhaps it is time for a new way to gauge payments to physicians. But with every action comes a reaction.

Medscape reminds us that ditching the SGR formula comes with consequences, most notably $200 million more in additional costs, according to the Congressional Budget Office.

With a December 1 deadline looming on a 21 percent Medicare pay cut for physicians, Lincoln's idea comes at an interesting time.

First, the Arkansas senator is fighting to keep her job amid a tough Nov. 2 battle where the words "Democrat" and "health care" seem to be sparking instant ire among voters. Some might assume this is a ploy to get senior voters to choose her name at the ballot box.

Second is the fact that Congress is on recess, expected to reconvene after the mid-term elections for a lame-duck session where little is expected to be accomplished. Maybe legislators will get to delaying the Medicare cut again - perhaps until the "new" Congress comes into office in 2011.

But Lincoln's proposal at least gets the conversation started. Many organizations, from the AMA to other medical societies, have been calling for a long-term solution to the SGR formula and an end to months of worry for physicians just to be followed by a delay of more months of concern.
Lincoln's proposal at least puts another idea out there for discussion by Congress and it has initial support in its home state.

Omar Atiq, the chairman of the Arkansas Medical Society, said in a statement that like other states in the nation there is a concern about having enough doctors to care for Medicare patients. In addition to a U.S. physician shortage, there is also more news each week about practices dropping Medicare patients as a whole, fed up with low reimbursements and not waiting around to see greater decreases.

Atiq said his group "wholeheartedly" supports Lincoln's "common sense" bill to strengthen Medicare and increase physicians.

Lincoln's bill may go nowhere. It may be one of the many pieces of legislation that falls on deaf ears among her congressional colleagues and never get out of committee. Or, it could spark debate once and for all on how to address the physician reimbursement puzzle that has had Washington, D.C., looking for an answer for years now.