The Medicare Payment Advisory Commission (MedPAC) has recommended that in order to fix the broken sustainable growth rate (SGR) formula, reimbursement to most physicians -- including radiologists and radiation oncologists -- should be cut each of the next three years, while reimbursement for primary care services should be frozen at its current levels.
After the initial three-year period, all physician reimbursement would be frozen for an additional seven years. The commission made its recommendations at a meeting held on September 15 in Washington, DC.
"[There's] a growing sense of urgency about the need to repeal SGR," said Commission chair Glenn Hackbarth during the session. "Of course, the cost of repeal will continue to mount. That is one thing that we can be sure of. Each year that the decision is deferred, the cost of repeal grows larger…So the premise of [our] effort is that it is in the best interests of the Medicare program over the long term to deal with the SGR issue once and for all. To accomplish that will require difficult choices, not just by MedPAC but much more importantly by the Congress itself."
Reaction to the plan was swift and critical: Rather than targeting particular physicians, MedPAC should root any payment cuts in data from quality initiatives, the American College of Radiology (ACR) said in a statement.
The formulaic link between annual fee-schedule updates and cumulative Medicare spending is flawed because it is based on aggregate expenditures -- there are no tools for targeting improvements in quality, efficiency, or price accuracy. It also does not differentiate by provider, according to MedPAC. Therefore, the commission recommended that four general actions be taken to repeal the SGR:
- Break the formulaic link between annual updates and cumulative expenditures for fee-schedule services.
- Replace the SGR formula with a stable, predictable 10-year path of legislated fee-schedule updates.
- Eliminate the 30% cut that is pending for 2012.
- Balance the total cost of repeal and the need to ensure beneficiary access to care by sharing the cost of repealing the SGR across physicians, other health professionals, providers in other sectors, and beneficiaries.
Access to primary care is at risk over the next decade, according to MedPAC, and patients are more likely to encounter problems finding a new primary care physician than a specialist. Therefore, a key way to realign fee-schedule payments to support primary care is to reduce the schedule's conversion factor for specialty services, which will pave the way to increases in fee-schedule revenue, ensure access to care for beneficiaries, and control the overall cost of SGR repeal, MedPAC said.
The current SGR rate calls for a 30% cut to the 2012 fee-schedule services. But staving off this cut permanently carries a high cost: a 10-year freeze across all services would cost about $300 billion.
So where will the offsets come from? According to MedPAC's proposal, a first tier of offsets comprises about $50 billion over 10 years and consists of MedPAC recommendations, while a second tier consists of about $180 billion over 10 years in proposals from other sources.
In addition, MedPAC is recommending a 2% annual payment hike per Medicare beneficiary for fee-schedule services.
Finally, MedPAC outlined ways to accelerate healthcare delivery reform, including new models such as accountable care organizations (ACOs), bundled payments, capitated models, and shared savings programs, in the hope that by encouraging providers to move toward these models, fee-for-service healthcare will become less attractive, the commission said.
