SGR: The Formula that Wouldn't Die

Can Congress agree on a permanent "doc fix" by month's end and spare physicians from a 27.4% pay cut? Don't hold your breath.

When “Focus of the Week” tackled the sustainable growth rate (SGR) formula in October, the situation remained bleak at best. (http://www.ajmc.com/focus-of-the-week/1011/sgr-focus-101711)

Now seems a good time to revisit the fate of the SGR, being as it is again up against the clock.

As it stands now, unless Congress agrees on a permanent “doc fix” by the end of this month, physicians who treat Medicare patients will have to brace themselves for a 27.4% cut in reimbursements starting March 1.

In January, more than 100 medical professionals joined together and served Congress with a proposal to repeal the SGR by redirecting no-longer-needed war funds that had been allocated for the Overseas Contingency Operations (OCO). In the proposal letter, directed to Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, (http://www.ama-assn.org/resources/doc/washington/medicare-sgr-sign-on-letter-23jan2012.pdf), the medical groups wrote, “We agree that our nation faces significant fiscal challenges, and that Medicare is not immune. However, it is impossible to implement commonsense programmatic reforms while an immediate and constant threat of massive cuts hangs over the program.” They also stated that if the SGR formula had been abolished in 2005, the end cost would have been $48 billion, but is now on track to reach $290 billion and continue rising if another patch is on the horizon.

Dr. Richard Lichter, CEO of the American Society of Clinical Oncology (ASCO), addressed this possibility in a recent interview with AJMC: “The problem with patches is two-fold. Number one, it is the classic kick the can down the road. Every time the SGR is patched, when that patch runs out, the cost of the permanent fix has gone up because the additional costs simply accumulate,” he said.

Democrats working on the tax package have been discussing the possibility of permanently replacing the SGR formula as part of extending a package of expiring tax cuts. But on February 7, following the committee’s fourth meeting, Rep. Camp told reporters, “It appears from the conversation today that the Democrats rejected the offsets that we had in our legislation.”

Sen. Max Baucus (D-Mont), the senior Democrat on the panel, cast doubt that the SGR would meet a timely death. “That would be my preference but this is the art of the possible.”

Could Patch No. 6 be on the way?