15 April 2015

Happy SGR Repeal Day



Yeah, it happened. The SGR is finally dead. Hooray! Sort of.

I mean, it's great and all that — we'll no longer have the annual threat of a massive payment cut from a poorly crafted piece of legislation from the 1990s; we'll no longer have to endure the annual ritual of last-minute legislative theatrics to avert the yearly cuts, we'll no longer have to waste our lobbying time and effort to make sure those cuts were never allowed to go into effect.

But let's not pretend this was in any way a win for physicians.

The replacement for the SGR, in the "Medicare and CHIP Reauthorization Act of 2015" (MACRA - get to know that acronym!) is that physician reimbursement is low locked into a long-term deflationary schedule. The Medicare Professional Fee Schedule will now post annual increases of 0.5% from 2015-2020 and 0% from 2020-2026. Even assuming this extended period of unnaturally low inflation continues for the next decade, that still amounts to a compounding negative real payment update every year. This may not be a terrible deal for, say, emergency physicians. I may not like it but my practice is very low overhead, and I can absorb a small negative hit to my income.

But for practices with meaningful overhead — rent, salaries and benefits for non-physician staffing, IT, equipment — this is really bad. Those costs are going to continue to rise, some well in excess of the general inflation rate. And that is going to continue to squeeze the viability out of general office-based practices, a trend that is already a decade old. It's worth re-emphasizing that many private payers track medicare fee schedules, so these reductions will ripplae across markets.

And let's not forget all the other crap that got piled into this bill while nobody was looking. The pay-for-performance program will now put an amount of physician income of 4%, rising to 9%, at risk for physicians and groups not meeting the as-yet-undefined performance metrics.

The performance metrics will, however, more or less require use of an EHR and are written in such a way that participation in the much-maligned ABMS Maintenance of Certification program is almost obligatory. There are also extensions of requirements for "Meaningful Use" of an EHR which I admit I am not an expert on but also seems to draw much ire from physicians.

It's a testament to how desperate the AMA and all the other organizations within the house of medicine were to get rid of the SGR, that there was not a single objection voiced to, well, to any provision of MACRA. We were prepared to accept anything, no matter how bad, to get rid of the SGR. Mission accomplished.

It's a bad deal. It's better than the alternative and probably the best deal possible from this Congress and in this budgetary environment, but we should not be too giddy about it, or pretend it's anything more than it is. The SGR is dead and the campaign to fix MACRA will begin, oh, any time now.

11 comments:

  1. Of all my colleagues who commented positively today about the end of SGR, not a single one could come close to describing what would be replacing it

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  2. The deflation is a symptom of a larger problem, which is that healthcare in the US is far too expensive. We can't sustain the current model going forward. As we try, everyone is going to get squeezed.

    If we can figure out how to stop doing so much unnecessary and sometimes counterproductive medicine, there will be room for a bigger (or stable) slice for providers. Single payer, NHS, everybody in Kaiser-like organizations -- we know the solutions. Physicians have been riding along with fee-for-service for many years, but the time is coming where either fee-for-service dies or we will look back on this as a golden age of physician compensation.

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  3. Thanks for a well-written perspective from a physician's perspective. I've often wondered how it's reasonably possible for a physician with any overhead at all to be able to navigate the current financial waters, and you've provided more insight into that.
    Honestly, I'd like to see healthcare economics evolve to a point where providers can receive payment without the absurd levels of overhead currently in play. Not sure how to do it, but honestly that would be a win for everyone except people with degrees in Medical Billing.....

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  4. Thanks for a well-written perspective from a physician's perspective. I've often wondered how it's reasonably possible for a physician with any overhead at all to be able to navigate the current financial waters, and you've provided more insight into that.
    Honestly, I'd like to see healthcare economics evolve to a point where providers can receive payment without the absurd levels of overhead currently in play. Not sure how to do it, but honestly that would be a win for everyone except people with degrees in Medical Billing.....

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  11. Thanks for This Article.. Really Helpfull.. I'd like to see healthcare economics evolve to a point where providers can receive payment...
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