Why the SGR Fix is Politics Instead of Progress for Physicians

March 20, 2014

The CBO says tacking a five-year delay to the individual mandate to the SGR fix will result in 13 million more uninsured and cost $138 billion.

The flawed Sustainable Growth Rate formula (SGR), part of the Balanced Budget Act of 1997, needs an act of Congress to be set right, as it has every year since the legislation passed.

Year after year, Congress has had to find a way to stop physicians' bread and butter, Medicare, from turning from sustenance to starvation.

This year, however, may be the last. And not because Congress finally fixes things, at least not in the way you think.

This year, it looked like the annual SGR circus would be put to pasture until the Republican side of the House, joined by 12 Democrats running in Obamacare hostile districts, tacked a five-year delay to Obamacare’s individual mandate to buy insurance or be taxed to the proposed SGR fix.

The proposed fix, the SGR Repeal and Medicare Provider Payment Modernization Act of 2014, would end the SGR methodology in favor of a single conversion factor for 2014 through 2018 of 0.5 percent, freezing the update to the single conversion factor at zero percent for 2019 through 2023. Further, it introduces a 1 percent bonus or penalty under a new “merit-based incentive payment system” loosely based on existing quality standard achievement.

The non-partisan Congressional Budget Office says the five-year delay to the individual mandate and the SGR fix will result in 13 million more uninsured and cost $138 billion.

Under the proposed fix, from a Medicare reimbursement perspective, particularly for primary care, if you are not a Patient-Centered Medical Home or Accountable Care Organization participant, you would be likely to see a 1 percent drop in reimbursements instead of a gain. Given the latitude given the CMS to adjust reimbursement rates, reimbursements would likely increase or decrease widely based on the value of the services, quality, and outcomes.

In plain English, the SGR would be replaced by pay-for-performance.

The proposal has no chance in the Senate, but, it may at least get the sides talking.

So, given that the proposal will likely be struck down, why isn’t this just business as usual this year? Obamacare has another mandate that most physicians wrongly think the White House will back down from: The transition from fee-for-service to pay-for-performance.

With a serious Republican bill expressing the same aim, this is a rare instance where both parties are aligned.

This is one mandate that is not borne of politics or ideology, but necessity, and the need is intensifying as Medicare rolls fill and costs soar.

No politician in their right mind will meaningfully touch Medicare benefits and hospitals cannot be allowed to fail, so, that puts physicians and their prescription pads right in the front row.

There is only one clear choice to step back from the firing line: Move from producing services to managing population health. The sooner you do, the sooner you turn from victim to the master of your own fate.