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SGR Update

August 29, 2013 | No Comments
Posted by Frank Ciesla

It is expected that when Congress returns after Labor Day that it will continue to address the issue of the Sustainable Growth Rate (SGR).  The good news of the proposed legislation is that it will eliminate the lookback covering an extensive period of time, since Congress deferred, on an annual basis, the implementation of the SGR.  Had the SGR been implemented, there was projected an approximately 30% reduction in the payments to providers that were made by the Medicare program.

While legislation has not been enacted, it appears clear that should the SGR be eliminated, there will be some other mechanism imposed to control the growth of expenses of the Medicare program.

This is important because the Congressional Budget Office (CBO) as well as the trustees for the Medicare program, use the current law in various ways.  The CBO uses it when it projects the costs or the cost savings of a program, and the trustees use it when they project the solvency of the Medicare Trust Fund.  Both of these agencies in the past have used the SGR as if it were to be implemented on January 1st of the following year, since the deferrals by Congress had been limited to an annual deferral.  That requirement resulted in calculations that assumed that there would be an approximately 30% reduction in payments to physicians under the Medicare program.

In light of that, Congress will have to substitute some statutory mechanism for controlling the increased expenses so that the CBO can continue to score the health care legislation in a “favorable” light, and the trustees of the Medicare fund can continue to project its solvency over a longer period than if such a requirement were not in the legislation.

The concern that providers must have is that in any proposed legislation that is based on outcomes, it is essential that there be a clear definition of outcomes that would be tied to the conduct of the provider and not the conduct of the beneficiary.  The provider cannot be responsible for the beneficiary’s failure to follow medical advice such as taking prescribed medicine in a timely manner or any other medical advice, which may alter the beneficiary’s conduct.  Such a “test” should not be incorporated into the quality standards, shifting the risk from the Medicare program to the provider, since the provider has no control over the beneficiary’s conduct.

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