Medicare Physician Payment Reform: Will 2014 Be the Fix for SGR?

By Mark McClellan, MD, PhD; Kavita Patel, MD, MS; Darshak Sanghavi, MD

JAMA, January 13, 2014

Every year since 2001, the SGR formula (sustainable growth rate) has called for an across-the-board reduction in payment rates, because the overall increase in the volume and intensity of physician-related services has exceeded the target SGR. Since 2002, Congress has stepped in with short-term legislation to avert the payment reduction.

What is different this year is that the patch has been enacted for only 3 months. This is because the congressional committees with jurisdiction over Medicare also passed bipartisan legislation to “fix” the SGR permanently and support a transition to payments based on a fundamentally different definition of value, with higher payments related to measures of better quality and efficiency for patients, not greater volume and intensity of services.

One major challenge to the ultimate success of the reform legislation is whether effective alternative payment systems can be developed quickly enough. Although there is promising evidence for many payment reforms now, no specific alternative payment models have been identified that could clearly reduce costs while improving quality across the nation. Moreover, participation in Medicare’s Physician Quality Reporting System has been limited, and many physicians believe that it has not improved quality.

How much physician payment reform occurs in 2014 may come down to how much physicians are willing to advocate for alternatives to the predictable but consuming short-term patches—alternatives that may not be permanent or clear but that would give physicians much more opportunity to lead in reforming health care.

http://jama.jamanetwork.com/article.aspx?articleid=1814190

Comment:

By Don McCanne, M.D.

This year we are finally going to enact an SGR fix (eliminate a flawed formula that otherwise would result in intolerable reductions in Medicare payments), and replace it with a system designed to reward better quality and greater efficiency. But if you read the third paragraph above, you will see that we don’t know how to do that! And this comes from former CMS administrator Mark McClellan and his colleagues at the Brookings Institution.

Instead of continuing to futz around with Mickey Mouse schemes allegedly aimed at improving quality and efficiency, we should adopt a system that is specifically designed to improve the way we spend out health care dollars – a single payer national health program. When we speak of an improved Medicare for all, we are referring to improvements made possible through a single system of financing health care – Medicare improvements which would be very difficult or impossible to implement as long as Medicare remains only one component of our fragmented, dysfunctional health care financing system – a system only perpetuated by the Affordable Care Act.

Medicare Physician Payment Reform: Will 2014 Be the Fix for SGR?

By Mark McClellan, MD, PhD; Kavita Patel, MD, MS; Darshak Sanghavi, MD

JAMA, January 13, 2014

Every year since 2001, the SGR formula (sustainable growth rate) has called for an across-the-board reduction in payment rates, because the overall increase in the volume and intensity of physician-related services has exceeded the target SGR. Since 2002, Congress has stepped in with short-term legislation to avert the payment reduction.

What is different this year is that the patch has been enacted for only 3 months. This is because the congressional committees with jurisdiction over Medicare also passed bipartisan legislation to “fix” the SGR permanently and support a transition to payments based on a fundamentally different definition of value, with higher payments related to measures of better quality and efficiency for patients, not greater volume and intensity of services.

One major challenge to the ultimate success of the reform legislation is whether effective alternative payment systems can be developed quickly enough. Although there is promising evidence for many payment reforms now, no specific alternative payment models have been identified that could clearly reduce costs while improving quality across the nation. Moreover, participation in Medicare’s Physician Quality Reporting System has been limited, and many physicians believe that it has not improved quality.

How much physician payment reform occurs in 2014 may come down to how much physicians are willing to advocate for alternatives to the predictable but consuming short-term patches—alternatives that may not be permanent or clear but that would give physicians much more opportunity to lead in reforming health care.

http://jama.jamanetwork.com/article.aspx?articleid=1814190

This year we are finally going to enact an SGR fix (eliminate a flawed formula that otherwise would result in intolerable reductions in Medicare payments), and replace it with a system designed to reward better quality and greater efficiency. But if you read the third paragraph above, you will see that we don’t know how to do that! And this comes from former CMS administrator Mark McClellan and his colleagues at the Brookings Institution.

Instead of continuing to futz around with Mickey Mouse schemes allegedly aimed at improving quality and efficiency, we should adopt a system that is specifically designed to improve the way we spend out health care dollars – a single payer national health program. When we speak of an improved Medicare for all, we are referring to improvements made possible through a single system of financing health care – Medicare improvements which would be very difficult or impossible to implement as long as Medicare remains only one component of our fragmented, dysfunctional health care financing system – a system only perpetuated by the Affordable Care Act.