October 22, 2012

With a new calendar year just over two months away, the medical and healthcare communities have begun the annual flurry of end-game activity seeking to influence payment rates.  Anesthesiologists need little reminder of the Sustainable Growth Rate (SGR) threat and the 27 percent cut in Medicare payment that will take effect on January 1, 2013, unless Congress intervenes.

On October 15^th, more than 100 national medical societies, including the American Society of Anesthesiologists, sent letters to the Senate Finance Committee, the House Ways and Means Committee and the House Energy and Commerce Committee highlighting the urgency of fixing the SGR problem for a new reason:

The sustainable growth rate (SGR) formula is an enormous impediment to successful health care delivery and payment reforms that can improve the quality of patient care while lowering growth in costs. Physicians facing the constant specter of severe cuts under the SGR cannot invest their time, energy, and resources in care re-design. The first step in moving to a higher performing Medicare program must be the elimination of the SGR formula. The status quo is bad for patients, physicians, and taxpayers.

We are no more optimistic now than in prior years, however, that the SGR is about to be eliminated. The price tag for blocking the 27 percent cut for just one year would be $18.5 billion, or $271 billion over the 10-year period 2013-2022 analyzed in a study released by the Congressional Budget Office last summer.   Most observers expect that Congress will simply pass another short-term fix either in late 2012 or in early 2013.  Although the election will be behind us and the legislators’ seats will be safe for another term, the courage on the part of Congress to face the wrath of physicians and our allies is not there.

Alternatives to a one-year fix were reviewed in a November 14, 2011 article in FierceHealthFinance. These included:

1. The Medicare Payment Advisory Commission (MedPAC) proposal to repeal the SGR, which would be financed in part by a decade-long payment freeze to physicians beginning with a 5.9 percent reduction in payments to specialists for three consecutive years.  Organized medicine’s understandable opposition caused FierceHealthFinance to give this proposal a 40 to 50 percent likelihood of adoption.
2. An American Medical Association proposal to repeal the SGR and replace it with a five-year period of Medicare updates based on practice costs. During that period, the Center for Medicare and Medicaid Innovation would conduct pilot projects to determine what might work as a permanent replacement. FierceHealthFinance gave this proposal a surprisingly high 50 percent chance.
3. The latest in a series of proposals simply to "reset" the SGR by erasing the accumulated prior deficits mandated to be offset with cuts to future payments. Although this has been supported by the medical community, it has had not gotten through a gridlocked Congress, and received a less than ten percent likelihood of passage.  Current sentiment regarding the national debt would not seem to increase that likelihood.
4. A proposal to divide the SGR into different spending targets, including major procedures, minor procedures, imaging and diagnostics, physician-administered drugs, and anesthesia services. The intent is to isolate drug costs, which have been growing rapidly and now amount to approximately 10 percent of the SGR’s component costs. After a couple of years of isolation, theoretically there would be enough political will to remove Part B drug costs from the SGR formula altogether, relieving the program of one of its biggest pressure points.  Pharmaceutical industry lobbying will prevent this proposal from going anywhere. FierceHealthFinance estimated its odds at less than 5:100.
5. Private contracting with Medicare patients.  As readers know, physicians cannot contract for higher payment rates with Medicare beneficiaries unless they opt out of Medicare totally for a minimum of two years.  The Medicare Patient Empowerment Act (H.R. 1700, S. 1042), introduced in May, 2011 and most recently signed by Congressman Jeff Flake (R-AZ) earlier this month, would allow patients and physicians to negotiate rates outside of the Medicare mandates. Patients could submit claims directly to Medicare and assign payment to their doctors. They would be responsible for amounts in excess of those paid by Medicare, without limit. This bill additionally would override most state balance billing laws.  The newsletter gave it less than a one percent chance of passage, and we would concur, given the views and interests of patient organizations like the AARP.

All in all, it is highly improbable that Congress will repeal the SGR and allow Medicare spending on physicians’ services to rise more than one or two percentage points (if that) in the near term.  Will 2013 be the year in which cuts are upheld?  So it will seem, on or around November 2nd, when CMS is due to release the final fee schedule rule for next year—but the final rule will almost certainly not be the final word.  CMS has no authority to override the operation of the SGR.  Congress does have that power, however, and we anticipate the usual intervention at the end of this year or at the start of next.  We hope it will be the former, to avoid claims confusion.   As always, we will share further information as soon as it is available.

Attention Pain Physicians Concerned About the E-Prescribing Penalty

CMS has announced that beginning November 1, 2012, it “will re-open the Quality Reporting Communication Support Page to allow eligible professionals the opportunity to request a significant hardship exemption for the 2013 eRx payment adjustment. Significant hardship requests should be submitted via the Quality Reporting Communication Support Page on or between November 1, 2012 and January 31, 2013. Please remember that CMS will review these requests on a case-by-case basis. All decisions on significant hardship exemption requests will be final. Important—Please note that this is for the 2013 eRx payment adjustment only. Hardship exemption requests for the 2014 payment adjustment will be accepted during a separate timeframe later in calendar year 2013.”

With best wishes,

Tony Mira
President and CEO