MedPAC under Fire for Proposed SGR Fix

Dawn Holcombe, MBA, FACMPE, ACHE

December 2011, Vol 1, No 4 - From the Editor


On October 6, 2011, the Medicare Payment Advisory Commission (MedPAC) proposed a way that Congress, if it wanted to eliminate the sustainable growth rate (SGR) formula without raising the federal deficit and within the confines of Medicare, could approach an SGR fix. Since that proposal, the opposition has been deafening. The MedPAC proposal would change the ratio between primary care and specialists for good. The plan is to freeze fees for primary care services for 10 years, while payments for all other services would be reduced by 5.9% for each of the first 3 years, followed by a freeze for the remaining 7 years.

Before the final MedPAC proposal was revealed, a number of medical organizations, including the American Medical Association, the American College of Cardiology, the American College of Emergency Physicians, the American College of Physicians, the American College of Surgeons, and the American Psyc hiatric Association, had already urged MedPAC to revise the proposal as it was outlined in an earlier, September draft.

Concerns have ranged from the impracticality of freezing reimbursements to physicians (many of whom operate as small businesses) over 10 years in the face of escalating operating costs, staffing challenges, and tech nology demands to the needless creation of misaligned interests be – tween primary and specialty doctors, at a time when collaboration and continuity of care is a harbinger of quality and cost-effective care delivery.

Two of the 17 MedPAC commissioners also spoke against the recommendation: both are specialty physicians, expressing concerns about specialty practice viability and the escalating impact from other payers that peg payments to Medicare rates, such as Medicaid.

Oncologists face particular challenges under this MedPAC model: changes in Medicare reimbursement; new edits and service bundling; and changes in base rates of the values for physician work, practice expenses, and geographic indicators have dramatically reduced oncology-related professional fees, in addition to the average selling price–related drug reimbursement reductions.

In 2011, few oncologists are covering the costs of treating Medicare patients from direct Medicare reimbursement, and patients are finding it increasingly harder to fund their own copay and coinsurance responsibilities, particularly for Medicare Advantage programs. Three years of 5.9% reductions and a 7-year freeze in payments are likely to dramatically change the ability of physicians to provide cancer services to Medicare patients, whether the physician is self-employed or employed by a hospital or by another organization.

Fortunately, oncologists are not alone in expressing concern about this new MedPAC proposal; they can stand with their other physician colleagues from many other specialties.

Congress and the Centers for Medicare & Medicaid Services (CMS) have often not accepted MedPAC recommendations over the years. By engaging in a strong and productive dialogue about the myriad of patient access issues, as well as quality and continuity of care issues that would be created by this MedPAC proposal, the medical community should be able to help those who are in a position to decide to accept or ignore this proposal.

As an alternative, many believe that physicians can be a valued part of the solution to healthcare cost reduction. Traditionally, Medicare Part A (hospital costs) and Part B (physician services) do not communicate or look at related costs of care. Reductions in physician reimbursement quickly lead to increases in more costly care from the nonphysician (usually hospital-based) sector.

It falls to everyone affected by the MedPAC proposal to productively communicate with Congress and CMS about the impact of focusing solely on funding an SGR fix from within the physician services bucket, and to consider how changes in communication and measurement of quality and care shifting may be better brought into the picture. It is not enough to challenge MedPAC for its proposal; it is also necessary to provide suggestions for alternative solutions.