The Need for a Long-Term Solution to the Perennial SGR Problem

The decade old uncertainty over fixing a permanent solution to Sustainable Growth Rate (SGR) is set to continue with the House deciding not to set off the accumulated deficit (25% for 2011) against primary care physicians till the end of this year. Although a temporary relief for doctors, the absence of a permanent solution will always keep doctors apprehensive every year. What is more, the accumulating deficit is destined to move upwards.

Primarily brought into force by the Balanced Budget Act of 1997 to amend Section 1848(f) of the Social Security Act for controlling costs related to spending on Medicare expenditure by the Centers for Medicare and Medicaid Services(CMS), Medicare Sustainable Growth Rate (SGR) happens to be an overriding improvement over the earlier method, the Medicare Volume Performance Standard (MVPS).

As the SGP advocates equating Medicare expenditure for each beneficiary proportionate to the growth in the GDP, physicians are driven to render quality service under the GDP sealing. Despite Medicare Payment Advisory Commission’s close watch – advisory to the U.S. Congress on the previous year’s total expenditures as against the target expenditures, and conversion factor that modifies the payments for physician services for the next year in congruence with the target SGR – the Medicare Sustainable Growth Rate has never been able to witness the Medicare expenditure in congruence with the GDP.

Although the CMS may place partial blame on physicians for overshooting the SGR every year, yet, amidst ever-rising cost of medical practice, physicians have been finding it hard to sustain the SGR. The estimated SGR for 2010, which is a negative 10.30%, and the conversion factor for the physician fee at a negative 25% are still more alarming. The current scenario would have meant a negative Medicare budget, and cut in physicians’ fees by 25%, in which case physicians would have resorted to boycott the Medicare patients.

In the long run this scenario is also going to affect the quality of healthcare as the physicians would be wary of investing money in new equipment or latest technology to enhance their patient care and management services if they are unsure of their potential revenue and expenses. Another pertinent fact here is that the implications of the SGR stalemate go beyond Medicare as most private insurers take a cue from Medicare to set their payment rates.

Fortunately, like it has been since 1997, there has been yet another extension to the implementation of conversion factor; Medicare and Medicaid Extenders Act of 2010 has deferred it till January 1, 2012. But at some point of time, the inevitable question will have to be answered and permanent solution to be given amidst booming demography of senior citizens, which will further escalate SGR problem. It is heartening to see the premier health body, AMA actively pursuing the issue with the congressional leadership for a long-term solution.

We, (, the largest consortium of medical billing and coding advisory are equally interested in witnessing a permanent solution to this perennial SGR problem. Being an integral part of medical endeavors, we hope it is realized sooner.