The American College of Radiology joined together with more than 100 other state and national organizations representing health care providers in sending the Senate Finance Committee a letter urging a permanent repeal of the Sustainable Growth Rate (SGR) formula.
The formula, which was designed to control the rising cost of Medicare, has been postponed through Congressional action nearly every year since its creation. With each postponement, the mandated cut to Medicare physician payments grows. This year the cut would be 27 percent unless Congress acts to postpone it by January 1, 2013.
The Congressional Budget Office current estimate on the cost of a 1-year postponement is just over $11 billion. Removing or resetting the SGR formula completely could cost at least $254 billion by 2022, the CBO says, and might be as high as $376.6 billion by 2022 if the SGR formula is reset and the target spending level going forward is set by GDP (Gross Domestic Product) plus 2 percent.
However, the continued uncertainty surrounding physician payments has its own costs, the ACR and the other signers of the letter point out. Foremost among these are the chilling effect the constant threat of cuts has on innovation in care delivery that could better reign in the rise in the cost of health care.
“Congress must stop this vicious cycle now so that a transitional framework can be put in place that will provide some stability and predictability for seniors and physicians, along with needed delivery innovations,” the letter states.
In place of the SGR, the ACR and the other signers put fourth principles and core elements that they thought should “form the basis for new federal policy on a transition from the SGR to a higher performing Medicare program.” These included elements that would provide for more fairness in how change is encouraged, including an organized way to track progress, use of rewards instead of penalties for adopting changes, choice in payment systems, exemptions for physicians that would face hardship in complying with changes, and rewarding physicians for their own actions and not for factors beyond their control.
A core principle was also the need for Medicare payment updates to take into account the cost of providing services as well as progress on quality and cost control. In addition, Medicare should step in with investment and support for infrastructure changes needed to reform how health care is delivered.