Stop me if you've heard this before: Congress is working to fix the Medicare funding formula physicians. That has been a common refrain in the nation's capital, only this time it appears to be more than lip service.
The U.S. House and Senate passed a Sustainable Growth Rate (SGR) repeal by overwhelming majorities. President Obama plans to sign the bill.
This much-needed healthcare fix twisted in the breeze for a decade and proposals for SGR fixes have come and gone. The problem stemmed from past efforts to rein in Medicare spending. In 1997, a budget deal between President Bill Clinton and the Republican-controlled Congress resulted in the SGR, which tied Medicare compensation to the gross domestic product. If utilization and physician spending outpaced GDP, physicians received a rate cut. If it fell below GDP increases, they received a pay increase.
Guess what utilization didn't do? Since 2002, when a 4.8-percent cut abruptly exposed the SGR's reality, the rate cut threat have come back from the dead more often than a slasher movie villain. Freddy Krueger doesn't have anything on SGR cuts.
For years, physicians who treated Medicare beneficiaries faced the constant threat of rate cuts exceeding 20 percent. Congress passed 17 patches to ward off deeper cuts. Most people in the know never expected those cuts to ever become reality, but the size of the cuts made the threat more ominous.
The repeal changes all that, and fits in with the Center for Medicare & Medicaid Services push to expand quality-based payments and move away from fee-for-service.
Physicians will receive a 0.5 percent increase every year for the next five years. Once the five-year period ends (2019), Medicare physician incentive payments will be condensed into the Merit-Based Payment Incentive System (MIPS) that would offer physicians serving as medical homes and lowering expenses. The bill allows for the creation of other alternative payment models.
Like most healthcare legislation, the SGR is far from perfect. The bill includes a two-year extension of the Children's Health Insurance Program, ensuring another CHIP showdown in 2017. There are some tradeoffs, which is to be expected in any bill this complex. In 2018, Medicare beneficiaries earning more than $133,500 will pay more for Medicare coverage. In 2020, Medicare Supplement plans will no longer cover the Medicare Part B deductible.
But the bill can claim a major victory, one that physicians that should ease the fears of most U.S. physicians - the bogeyman of SGR cuts won't be raised again.