Alliance on Health Reform Holds Briefing On SGR Alternatives
February 3, 2014 09:34 AM
The Alliance for Health Reform and The Commonwealth Fund recently held a briefing in the Dirksen Senate Office Building entitled, “Beyond the SGR: Alternative Models.” Included in the panel were moderators Ed Howard of the Alliance for Health Reform and Stuart Guterman of The Commonwealth Fund. Presentations were given by Gail Wilensky, Economist and Senior Fellow, Project Hope; David Share, MD, Senior Vice President of Value Partnerships, Blue Cross Blue Shield of Michigan; and Mark McClellan, MD, Senior Fellow and Director, Initiative on Value and Innovation in Health Care, Brookings Institution.
The Sustainable Growth Rate (SGR) was created in 1997 as part of the deficit reduction legislation. Initially, the SGR was supposed to regulate federal healthcare spending by tying physician payment to an economic growth target. From 1997 to 2001, physicians saw modest pay increases due to the SGR. Starting in 2002 Medicare expenditures began to exceed the targeted growth rate calculated by the SGR and physicians experienced a 4.8 percent pay cut. The current issue, as described by Stuart Guterman, is that reductions were made across-the-board and did not succeed in controlling the growth in spending. As he stated in his presentation, “It [SGR] does not provide incentives to improve quality, appropriateness, and coordination of care.”
Moderator Ed Howard indicated that the cost of permanently repealing the SGR is currently $116.5 billion over 10 years, which is down from the $316 billion estimate made by the Congressional Budget Office in January 2012. Congress enacted a three-month SGR extender in December 2013 which is projected to cost $8.7 billion. It is anticipated that SGR legislation will be considered again at the end of March – coinciding with NAHC’s annual March on Washington. There is bipartisan interest in a permanent SGR fix in both the House and the Senate that would allow for increased physician fees as well as greater incentives for quality care, clinical performance improvement, and participation in alternative payment models. The challenge will be to find offsets to pay for the SGR fix.
NAHC strongly opposes any additional Medicare cuts or copayments to pay for SGR reform and encourages all of its members to join in the March on Washington – March 23 – 26 - to plead the home care and hospice community’s case directly to elected officials.
The panelists all emphasized the importance of evidence-based reforms when it comes to proposed alternatives to the current legislation. Dr. David Share, for example, insisted that any reforms must produce lower costs and yield better patient care. Other panelists cautioned that any alternative models intended to replace the SGR legislation should consider the following:
Possible sources of funding for physician payment reform
Permanent (10-year) or semi permanent (5-year) status for funding
Incentives for hospitals and providers to coordinate care plans and increase quality of care
NAHC has been working with legislators in effort to ensure any SGR fix or replacement is beneficial for home health and hospice community, and will continue to fight to ensure that home health and hospice is not targeted for cuts or additional copayments to pay for an SGR fix.
Negotiations are currently underway between the House and the Senate to come up with a final SGR package. While the threat of offsets loom, the Senate Finance Committee’s SGR bill does have several provisions that are beneficial to the home care and hospice community.
For more on the Senate’s SGR bill, please see NAHC Report, December 17, 2013.
For more information on The Alliance for Health Reform’s briefing “Beyond the SGR: Alternative Models,” please click here.
To register to attend the March on Washington, please click here.