Healthcare Professionals for Healthcare Reform

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Medicare Improvements for Patients and Providers Act

The House of Representatives passed the “Medicare Improvements for Patients and Providers Act” yesterday. (The roll call can be viewed here: ) This bill blocks the 10% decrease in Medicare reimbursements that is mandated by the “sustainable growth rate” (SGR) formula built into Medicare financing several years ago that aimed to tie physician reimbursement to actual spending and targeted spending.

Physician payments under the SGR formula are tied to the Gross Domestic Product (GDP), which bears no relationship to patients’ health care needs or physician practice costs. Utilization of physician services grows more rapidly than GDP, so using GDP as the standard for utilization growth in the SGR means that the target is always set too low. The formula also does not make adjustments for new Medicare coverage policies. Omitting the costs of such treatments from the SGR targets increases the likelihood of pay cuts. None of the factors in the SGR recognize Medicare spending due to technological advances.

Because the formula stipulates that the adjustmant is reassessed each year and that almost everyone in Congress understands that the formula is flawed, it has meant that each year payment cuts to doctors are proposed at the start of the year until Congress steps in intervenes. Meanwhile the gap grows each year so that the potential cut continues to grow quicly. In fact, the 2006 Medicare Trustees Report predicts cumulative reductions in Medicare physician payment rates of nearly 40% by the year 2015 as a result of the SGR formula.
It is widely felt in Washington that this formula needs to be changed, but it has been estimated that immediate repeal of the SGR could cost as much as $318 billion, according to the Congressional Budget Office. This has led to complete inaction on the part of Congress.

Several proposals have been made by physician groups, but there has been little action. Hopefully, any new reform bill, will do away with SGR!

Follow Up: I realize that this is only half the story… It turns out that a similar bill in the Senate was blocked by Senate Republicans: Read about it on the AAFP website.


June 25, 2008 - Posted by | Uncategorized

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