I don't know anyone who believes that Congress will allow the SGR (Sustainable Growth Rate) to become effective and slash Medicare payments to physicians by 26.5 percent. Every year for the past decade, Congress has quailed at the last minute and overridden the cost-control policy rather than slash Medicare payments to doctors. They will do so again this time.

And while they're at it, they need to repeal the SGR altogether.

The SGR itself has become a bad, predictable joke, one of those knee-slapping Congressional. If-we-don't-fix-this-thing-soon-we're-gonna-have-to-hurt-you-again jokes. (See fiscal cliff, sequestration, etc.)

And you know it's bad when a quasi-government agency such as MEDPAC (Medicare Payment Advisory Commission) presumes to tell Congress, publicly, to cut the nonsense. Here's the money quote in MEDPAC's April 2013 Report to Congress: Temporary stopgap fixes to override the SGR undermine the credibility of Medicare because they engender uncertainty and anger among physicians which may cause anxiety among the beneficiaries. Deferring repeal of the SGR will not leave the Congress with a better set of choice.

In other words, you can't pull on your big-boy pants until you take off the clown shoes.

Indeed, Medicare needs some grown-up governance and budgetary stability sooner rather than later. The sequestration is set to take a 2 percent bite out of Medicare payment rates starting in April, and no one knows if the rate cut will stand. The roiling budgetary and political climate has contributed to the Department of Health and Human Services suggesting very low reimbursement rates for Medicare Advantage plans for 2014.

The rates, which are set to be finalized on April 1, will determine the level of benefits and premiums for MA plans, and many plan executives have said the proposed levels will cause serious, disruptive price spikes, benefit cuts, and plan withdrawals. This is more than the usual annual round of hand-wringing by the insurers. They will need to design their 2014 MA plans and their costs in order to submit their bids by the June 3 deadline.

In recent investor meetings, executives of Humana and UnitedHealth Group said to expect dramatic cuts to MA plans and withdrawals from some regions if the cuts occur potentially pushing thousands of seniors back to fee-for-service Medicare.

Meanwhile, well-meaning reform-minded regulators are trying to steer the U.S. health system away from fee-for-service medicine and toward care delivery and business models that reward efficiency, care coordination and good health outcomes. They're using their arsenals of pilot programs and grants to accelerate adoption of healthcare IT, creation of accountable care organizations, coordination of Medicaid and Medicare benefits for dual-eligibles, and other lofty initiatives. These initiatives invite physician practices, hospitals, insurers and other healthcare players to reorient themselves to do business differently and the current budget disruptions don't exactly inspire confidence.

In fact, the reform initiatives are being undermined: the fiscal cliff deal scuttled one half of the proposed community based COOP insurance exchange plans in 25 states.

For health plans, providers, pharma and Medicare enrollees, the current atmosphere of uncertainty necessitates conservatism: plans will approach risk cautiously, design benefits sparingly, price to protect margins. Providers will have to protect their margins as well, and may be slower to risk big transformations. They will wait to see what happens.

Meanwhile, the Emperor Congress marches past in the clothes designed for the latest news cycle and the next primary election. And the view from here is decidedly unattractive.

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