The Sustainable Growth Rate (SGR) or called the “Doc Fix” is a complex formula used to set annual expenditure targets for Medicare to adjust physician payment to keep Medicare spending from exceeding the rate of GDP growth. Basically, SGR is a complex formula that incorporates inflation, projected per capita GDP growth, the projected rise in Medicare Part B beneficiaries, and the cost of any changes in law.
CMS uses all of these variables to create a spending target for physician expenditures in a given year. According to the SGR’s formula, if there is no intervention, physicians will receive a 25 percent cut in reimbursement rates for their Medicare patients in January 2014.
In early 2013, Representative Allyson Schwartz (D-PA) and Joe Heck, D.O (R-NV) introduced the “Medicare Physician Payment Innovation Act” to permanently repeal the SGR formula. The Act identified a variety of unique payment models so that providers would have options across medical specialties, practice types, and geographic regions. The Act also identifies a variety of unique payment models to provide options for providers across medical specialties, practice types, and geographic regions.
However, on July 21, 2013, the House Energy and Commerce Committee unanimously passed “The Medicare Patient Access and Quality Improvement Act of 2013” (H.R 2810). The bill sponsored by Representative Michael C. Burgess, MD, Vice Chairman of the Committee’s Subcommittee on Health repeals the SGR formula.
Molly Cooke MD, President of the American College of Physicians is happy to see that the bill provides for five years of stable and positive fee-for-service updates for all physicians which would be followed by a new program. This program would base annual updates on physicians’ effectiveness in achieving measureable improvements in care coordination, patient experience, patient safety, and clinical outcomes.
As Dr. Cooke notes, “The bill promises to accelerate the growth of Patient-Centered Medical Homes with the objective to improve outcomes and lower the costs for patients. The bill also creates strong incentives for physicians to recommend and participate in a variety of alternative payment models.
Both the Senate Committee on Finance and the House Ways and Means Committee have taken steps to get the SGR repealed. Last May, Senate Committee with Committee Chairman Max Baucus (D-MT) and Ranking Member Orrin Hatch (R-UT) called out to healthcare providers to bring ideas to the table on how to improve the Medicare Physician Payment System.
This year, the House Ways and Means Committee produced the document titled “Overview of SGR and Reform Proposal” that discusses the major elements needed to reform the system. The document suggests that the FFS payment needs to be further reformed to account for the efficiency of care provided.
AMA President Ardis Dee Hoven MD thinks that Congress is going to pass a permanent SGR fix this year. Many think that to get the permanent SGR fix passed, any proposed legislation will have to be incorporated into a larger legislative package.