SGR Developments

Federal budget authorities have determined that the amount Congress needs to eliminate for the Medicare sustainable growth rate formula is much lower lower-than-expected due to lowered health care spending.

The reduction in offset figure has led for new calls for permanent Medicare payment reforms..

Secretary Kathleen Sebelius of Health and Human Services said on Feb. 12 that the current administration wants to end the SGR. A 26.5% rate cut was delayed from going into effect, but because it expires in 2014, it does not provide the long term fix that doctors and patients were looking for.

The CBO usually updates lawmakers regarding reforms to Medicare policy and how changes would affect federal spending They have forecasted numbers for keeping Medicare rates for the last 10 years, which was highest in 2011 at twice what it is now.

The CBO projected a $244 billion estimate in November 2012. This was due to slower spending on physician services in the recent years. The SGR works by lowering rates when spending on services exceeds set levels. Medical billing services are reporting lower payment amounts as well.
Because of these improved numbers, the SGR is now planning to increase physician pay instead of the planned decreases over the coming years. If the SGR baseline was recast, it would mean favorable payment updates for physicians.

Medical groups were positive about the lower offset figures. Many are urging lawmakers to take a step toward reforming theMedicare pay system and eliminating the SGR.Slower growth rates in health spending are a key to reforming Medicare’s pay system and continuing the decline is good news in Washington. Reducing future federal budget deficits through savings in entitlement programs is a huge political prize.

The Republican House leadership has proposed repealing the SGR l and to modernize existing pay system without larger deficits. The CBO had earlier estimated the amount of money required to stabilize doctor pay rates, but lawmakers updated the proposal to reflect the latest projections.

The GOP proposal is a multi prong approach to overhauling Medicare. First is to replace the SGR with defined pay rates. Then the fee-for-service system would be changed to reward doctors for better quality care. Lastly, provisions would be put in place to reward physicians who provided care more cost effectively.

The new system would employ medical specialty societies to provide guidelines for quality and clinical improvement activities. Programs would measure patient outcome statistics when comparing doctor’s performance with their peers.