Sustainable Growth Rate The Damocles sword that hangs over Physicians
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Sustainable Growth Rate The Damocles sword that hangs over Physicians

Published by: Ecareindia (13)
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The Holiday Season is here and whilst the entire US and most people across the globe celebrate the festive spirit of the season, there is one large group that gets into a fear psychosis around this time of the year - Not the airline passengers that need to go through increased security by the TSA, but Medicare beneficiaries and their Care Providers – the Physicians. 

Every year around this time in December, the SGR rate cut ‘circus’ begins and is brandished at the Practitioners and consequently their Medicare patients.  This year has been no exception.  The Congress passed a resolution on 13th December putting ‘on hold’ the rate cut for the next two years and actually increasing the Medicare rates by 1% for 2012, but on 20th December the Senate rejected it.  Though there is wide bipartisan support for repealing the rate cuts, the Congress and Senate do not share the same views on how to pay for this repeal.  Now that the Senate has adjourned for the Holiday Season till 23rd January (unless the Senate re-convenes for a special session in the first week of January), the slim hope that there could be a solution to this problem before the New Year, unlike previous years, has once again vanished.

The rate cut of 27.4% will come into effect from 1st January, 2012.  CMS has already announced that Medicare will keep all claims on hold for the first 10 working days of the year so that it can prevent a re-hash of last year, when all the claims were paid with the rate cut and once it was repealed, had to be re-processed at the new rates, resulting in huge administrative costs for CMS and its MACs.  Though CMS has tried to prevent this wasteful expenditure, there is every chance that it might not be successful.

The Sustainable Growth Rate (SGR) was part of the Balanced Budget Act which was passed in 1997 to control spending by Medicare on Physician services.  The SGR was supposed to limit the rate at which Medicare spending grew every year to within the GDP growth rate.  But the real problem has been that the Healthcare spending in the US has far outstripped the GDP growth rate in the past decade.  This resulted in ever larger spending cuts proposed every year – but deferred every year by special legislation.  The result is that after 12 years of consistent deferments, the rate cut today stands at an exorbitant 27.4%.  The Congress and the Senate have failed to reach a consensus on permanently fixing this problem.  Healthcare associations like the AAFP, AMA, HBMA, MGMA, HFMA and others have lobbied and consistently spoken against this method.  Some of them like the AAFP have suggested a 5 year moratorium on rate cuts so that alternative methods of ‘spending cuts’ can be tested over a period of time before replacing the SGR.

If the rate cut goes through without any legislation from the Hill, then Physicians will stop caring for Medicare beneficiaries.  There is also a possibility that the instances of fraud/abuse could increase because of this pressure, even though there is an increase in vigilance on the Physicians through the extension of the RAC program.  On the other hand, this would also put pressure on other Healthcare entities like RCM and Medical Billing companies that service the Physicians.  The rate cut and the consequent loss of revenue for the Physicians would translate to requests for realigning the fees for revenue cycle management and medical billing/Coding services from these Physicians.  This would result in a vicious cycle of payment cuts and unemployment in an economy that is slowly trying to recover. 

The latest OECD data shows that the US spends $ 3,000 more per individual per annum when compared to other developed nations.  The total of $ 900 billion more spent on Healthcare (compared to other developed nations), essentially does not mean better healthcare for the individual.  By one estimate, wasteful elective procedures and diagnostic tests alone account for $200 billion annually.  When compared to this figure, the SGR rate cut of 27.4% would fetch only about $16 billion per annum.  The more prudent way to approach and solve this problem will be to plug the ‘holes’ in the system rather than trying to cut reimbursement to the already diminishing number of Primary Care physicians.

The call is now to the lawmakers on the Hill to set aside their petty differences and make a meaningful legislation that has some lasting impact on Medicare and its beneficiaries.  Even if it is not achieved before the end of this year, the hope is that the first weeks of the next year could ring in a change so that better sense prevails.

Happy Holidays!!!

Ecareindia - About the Author:

Tanya Gill is the Public Relations Manager for ecare India based in Chennai, India. She has wide knowledge and experience in the medical industry. ecare India is a leading medical billing company offering end-end medical billing services and is backed by extensive domain expertise, latest technology and dynamic compliance norms. ecare is HIPAA compliant and is the first Indian medical billing company to get ISO 27001: 2005 certified for information security management. ecare is also ISO 9001:2008 certified for quality management. By providing outsourced medical billing services, ecare makes it feasible.

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