Obama’s SGR Fix Gets Mixed Reviews


President Obama's budget proposal for a two-year, $54 billion extension of the temporary fix to the reimbursement rate that Medicare pays doctors is getting a mixed reception from doctors as well as legislators on Capitol Hill.

"It's not ideal, but it's better than what we've been dealing with," says Ron Greeno, MD, SFHM, chief medical officer for Cogent Healthcare, and a member of SHM's Public Policy Committee. "The question is, will it remain part of the budget that gets passed?"

Last year, Congress approved five temporary extensions preventing draconian rate cuts mandated by Medicare's sustainable growth rate (SGR) formula, including a one-year, $19 billion extension passed with bipartisan support during the lame-duck session. The new proposal would further delay the cut, now at 25%, until September 2013. To pay for the patch, the budget suggests $62 billion in cuts that would transfer more of the Medicaid burden to states, recoup "erroneous" payments to insurers, and speed the process of getting generic drugs to market at the expense of major pharmaceutical companies, among other targets.

Republicans, however, have objected to the spend-now, save-later mechanism paying for the fix, with spending over two years counterbalanced by projected savings over an entire decade. And the proposal is silent on how the fix would be funded for the eight years beyond 2013, an extension the budget suggests would require an additional $316 billion.

Both Democrats and Republicans agree that the current SGR formula is unworkable. But Dr. Greeno says neither party wants to make a move that would add hundreds of billions to the debt amid heightened concern over the rising deficit.

"I think we need to change the way we pay, and I haven't figured out exactly how," Sen. Tom Coburn (R-Okla.) told The Hospitalist in an interview earlier this month. "But the SGR's a joke; it's never worked. It was a gimmick from the time it started in 1997 forward. It's never going to work."

Nevertheless, Republicans like Sen. Coburn have signaled that they understand allowing the rate cut to take place is untenable. "What I would tell your physicians is … they won't see any cuts, but they're not going to see any increases," he said. "The country is broke."

If Congress ultimately agrees to a two-year solution, Dr. Greeno says, it could buy the administration some wait-and-see time amid ongoing efforts aimed at repealing parts of the healthcare reform law or having it declared unconstitutional. A two-year extension also could buy more time for the Centers for Medicare & Medicaid Services' new Center for Medicare and Medicaid Innovation to figure out how to transition out of a total fee-for-service healthcare environment. "But that," Dr. Greeno says, "is going to take years."

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