The Sustainable Growth Rate or SGR is in the news again as Congress debates reimbursement rates for physicians seeing Medicare patients. These fees will decrease by 27% next month unless Congress reaches an agreement. Discussions on preventing this decrease in reimbursement are pitting hospitals vs. doctors.
Lawmakers in both parties say they want to give doctors a small increase according to a recent article in the New York Times, but they could not agree in how to cover the costs. To help offset the cost of paying doctors, House Republicans want to reduce certain Medicare payments to hospitals. Democrats and Republican Senator Jon Kyl of Arizona want to cover the cost with money saved by winding down the wars in Iraq and Afghanistan.
Additionally, a federal advisory panel, the Medicare Payment Advisory Commission, has voted to recommend cutting Medicare payments to hospitals for some of the most common outpatient services. The panel says that the government should pay the same rate for “evaluation and management” services regardless of whether they are performed in doctors’ offices or hospital outpatient departments. Reimbursement rates for hospital clinics are higher – for example, $124 for an office visit involving a medium level of services to an established patient compared to $69 for the same visit in a physician’s office.
Hospitals say the higher payments are justified because they treat sicker patients and have higher overhead costs. The president of the Greater New York Hospital Association said that if the cuts took effect, hospitals would curtail services and close some clinics. Physicians also report that a 27% decrease in reimbursement would limit the number of Medicare patients that they could see.
The American Medical Association is continuing with its efforts to persuade Congress to scrap the SGR formula used to calculate physician reimbursement. They are encouraging Lawmakers to develop a new formula for calculating reimbursement rates. Cuts to Medicare reimbursements have been slated and postponed at least a dozen times since 2002 when small cuts in reimbursements were enacted.
Much of this information was taken from a February 7, 2012 article published in the New York Times.