Recently in Medicare Category

Implementation of the Sustainable Growth Rate, or SGR, formula—the formula ostensibly used to control Medicare spending and physician reimbursement for Medicare services—has been stayed numerous times since it was legislated in the late 1990s. As Harvard policy analysts describe in a newly published study at the NEJM website, the law dictates that the Medicare spending target be periodically set on the basis of several national measures (eg, per capita GNP, Medicare growth), and that, if actual Medicare expenditures on physicians' services exceed the target, an SGR-defined cut kicks in to rein in these expenditures.

Almost every year since 2002, the Harvard analysts affirm, the actual expenditures have surpassed the target, and the SGR formula has dictated cuts to close this spending gap or "hole." But Congress—for economic and political (Congress? political?) reasons—has repeatedly sustained these cuts, which are cumulative with each passing stay. The most recent SGR-defined cut in physician fees, now an untenable, practice-killing 27.4%, was temporarily stayed by Congress in December. However, the cut will, at least theoretically, occur at the end of this temporary stay, the end of February—unless Congress votes on yet-another stay. Abolishing the SGR formula altogether has been terribly problematic, because canning the law adds tremendously to the already tremendous US deficit, and pundits either differ or are entirely at sea about a replacement bill that would mitigate the costs of trashing the formula.

In the Harvard study, sources of the spending gap or hole, from 2002 to 2009, were examined by state and specialty, and considerable differences were found by either parameter. For instance, the specialty of cardiology—perhaps justifiably, perhaps not—contributed substantially to total expenditures and excess growth during the examined time period. Between 2003 and 2009, the specialty overshot its SGR target by nearly 80%. On the other hand, general surgery undershot its estimated SGR target by more than 100%. The point: it would be unfair to penalize general surgeons with an across-the-board SGR cut if they didn't contribute to excessive Medicare spending.

The authors' conclusion, however, is not to readjust the SGR-defined cut by specialty or state, but to go more granular to control physicians' Medicare reimbursement. In an accompanying audio commentary, anchor author Michael Chernew calls Congress's short-term fixes "shameful" and argues that the least-reprehensible solution is to have Medicare reimbursements based on the expenditures of smaller physicians' organizations (something like accountable care organizations), which would accept "global payments or payments bundled by episode of care." These smaller organizations would allow physicians to control fees, he argues, and to take greater responsibility for their expenditures by "eliminating lower-value therapies and delivering higher-value health care." On the basis of observed experience in Massachusetts, Chernew estimates that MDs could be pushed into these organizations "very rapidly," say within the next 3-4 years, depending on how the SGR formula is "fixed" by Congress.

Image of the Grand Canyon from the Association of Environmental and Engineering Geologists.

Yesterday the Senate passed a bill that would delay the perpetually looming cut in Medicare reimbursement to physicians by 1 whole year. This proposed delay is distinct from Congress's previous bandaid measures to stave off the SGR-defined drop in Medicare reimbursement, which have lasted anywhere from 1 to 6 months, iirc. (The most recent bill to postpone the cut was passed earlier this month. If Congress hadn't acted, Medicare reimbursement to physicians would have dropped by 25% on January 1st of 2011.)

According to the intrepid Robert Lowes, writing for Medscape, the House is now expected to pass the Senate's new legislation, which had bipartisan support. The total cost of the bill, which addresses a few other Medicare and government-insurance issues, exceeds $19 billion. But the lion's share of that, nearly $15 billion, represents the so-called Medicare "doc fix."

Sponsors of the bill say that its cost will be taken care of by an amendment to PPACA, or the part of PPACA that concerns thresholds for tax credits to those who would be legally mandated to buy health insurance (in 2014).

SGR = sustainable growth rate.

Photo of weathered can from magannie at Flickr.

Not to anyone's surprise (because it's happened multiple times since 2003), Congress approved on Monday yet-another measure to postpone a big cut (this time, 23%) in Medicare reimbursement that would have gone into effect today. The bandaid bill extends the repeatedly delayed SGR-defined cut in Medicare reimbursement until January 1—which means that Congress will have to convene during the holidays to draft and pass yet-another bill that postpones the cut that is scheduled to begin on New Year's Day, now calculated at 25%.* (The current bill awaits the President's sig—which is a given.)

According to Robert Lowes at Medscape, longer-term fixes are in the works, which would extend the "Medicare guillotine," as he calls it, about 12 months. The big trick is finding palatable ways to make up the huge cost of repeatedly (or indefinitely) extending the SGR-defined cuts or of repealing the formula entirely.

SGR = sustainable growth rate.

* Or Medicare will probably delay the processing of physicians' submissions for reimbursement in January until Congress acts.

Photo of weathered can from magannie at Flickr.

The improved outlook for Medicare's solvency, which increased from 2017 to 2029, is due to PPACA, say Medicare's trustees* in their newly released summary report (the full report can be found here). The trustees essentially borrowed on the projected savings (or really anticipated cost-cutting measures) from legislated healthcare reform to extend the life of Medicare's Hospital Insurance Trust Fund specifically.

The life of Medicare's Part B service, which covers outpatient and prescriptions costs for seniors, was also extended. But the trustees' current projection on Part B assumes that the SGR-defined cut in Medicare reimbursement to physicians will kick in December 1, reports MedPage Today. The cut now stands at 23%. Congress has repeatedly voted to stall the cut but is yet to repeal the formula; to do so would add substantially to the deficit. (One healthcare expert recently predicted in the NEJM that Congress will never repeal the formula.)

The trustees' report, in some ways, is a veiled warning to those Republicans (and Republican states—lookin' at you, Missouri) who would attempt to mess legislatively with PPACA. You repeal PPACA, they might say to detractors, you doom Medicare (and Social Security) to an earlier death.

PPACA = Patient Protection and Affordable Care Act; SGR = sustainable growth rate.

* Timothy F. Geithner, Secretary of the Treasury; Kathleen Sebelius, Secretary of HHS; Hilda Solis, Secretary of Labor; and Michael J. Astrue, Commissioner of Social Security.