Fixing the Sustainable Growth Rate formula

Wednesday, January 01, 2014 11:15 AM

Politicians may finally be digging out of the SGR hole

Kim Ross, CMS consultant

Politicians understand the first rule of holes that states, “If one wants to get out, stop digging.” Since 1998, when the Balanced Budget Act introduced the Sustainable Growth Rate trigger to reduce physician payments across the board when Medicare Part B spending exceeded a target calculation, Congress declined to pull that trigger roughly 10 times by negating the cut outright or delaying it for a year, digging that budget hole progressively deeper each cycle.

The cumulative effect of more than a decade of brinkmanship and kicking that can down the road is a scheduled 24.4 percent across-the-board cut in March, temporarily patched in January so three committees of jurisdiction can continue to work toward a bipartisan, long-term solution.

By all accounts, Congress may be on the verge of “fixing” what almost every analyst, physician and member of Congress agrees is a failed approach to limiting total Medicare Part B (physician) expenditures. The going price for dumping the (un)Sustainable Growth Rate has dropped from the $298 billion Congressional Budget Office estimate in 2011 to $116.5 billion as a consequence of the global decline in health care expenditures. It’s not exactly a fire sale, but approaches a price that might be considered financeable.

That’s still a pretty deep hole. However, despite physicians’ substantive concerns about the details, a bipartisan consensus has solidified around a set of interdependent proposals that may give physicians a shot at repealing the SGR and plot a 10-year transition to realign physician payments from fee-for-service to alternate methods based more closely on performance metrics yet to be defined.

This complex legislation may be the only health care proposal in Washington that has transcended the otherwise intractable partisan divides. This is not a Hobson’s choice of no horse or a bad horse. It is more likely a calculated risk against the null hypothesis. What happens to medical practice if things are left as-is? There is a spirited debate in the houses of delegates and other medical forums on that test, but physician polling and the growing body of research shows support for the value of care coordination, hot spot case management, and payments that align with those services for properly structured, financed and supported collaborative models.

This set of blueprints will evolve over the course of the legislation’s proposed 10-year trajectory. The design is a bit of a timing challenge – weaning physicians off fee-for-service while providing the resources to make those daunting transitions to clinically defensible quality metrics. Unaligned practices will be at a disadvantage in the short run while more fully integrated and coordinated systems will probably do well much earlier in the process.

Physicians are understandably skeptical about this change, given the lack of detail, a reliance on largely unconfirmed alternate payment experiments, potentially imbalanced quality incentives versus penalties that may have the inverse effect from the intended, and the structurally flawed notion of cannibalizing the funding streams from specialists. (Other than that, Mrs. Lincoln, how did you like the play?)

Despite this, a wide range of medical societies are betting they can provide the exam room level perspectives and realities to revise and refine this incomplete work over the course of the legislation’s development and life span because, ultimately, they’re the ones at the bottom of that $100 billion hole.