In 1997, Congress passed the Balanced Budget Act and replaced the Centers for Medicare & Medicaid Services’ (CMS) formula to calculate physician payments for those who see Medicare patients with a new formula, the sustainable growth rate (SGR). While the SGR was intended to ensure Medicare’s expenditures maintained budget neutrality, the formula was unrealistic because it was based on the GDP and not on actual health care practice costs. In reality, physicians with Medicare patients have seen their actual practice costs rising at a greater rate than GDP and exceeding the SGR every year, triggering payment cuts.
Congress has been applying tattered Band-Aids to this issue for more than a decade. In fact, lawmakers have intervened to stop physician payment cuts twelve times, averting immediate negative impacts, but digging a much deeper financial hole in the long run. And by failing to address the underlying problem, Congress’ dishonest budgeting is impacting access to quality care for America’s seniors, the ability to modernize physicians’ practices and the future of the health care system.
First, because the SGR fails to account for the actual cost of providing medical care to seniors, many physicians are opting out of the Medicare program, leaving a shortage of physicians who accept Medicare patients. In a recent survey, 30 percent of primary care doctors said they limited the number of Medicare patients in their practice because of low reimbursement rates for their services.
And it’s only going to get worse, with the baby boomer generation knocking on Medicare’s door. Over the next 19 years, 10,000 Americans will turn 65 each and every day. The increase in the volume of patients and a shortage of physicians will have a profoundly negative impact on access to care for current and future Medicare beneficiaries – the population that requires medical attention most often.
Second, physicians’ ability to make investments to modernize their practices and improve their efficiency is being undermined. The technological revolution is having a permanent impact on our health care system and doctors need to take steps to improve IT and interoperability for patients. That shift is hindered by the uncertainty that the SGR causes.
Third, SGR is contributing to the growing trend of doctors who are avoiding primary care specialties altogether because of the high percentage of Medicare patients associated with primary care and the lower payment rates they’ll receive. This impacts not only the growing population of seniors, but all Americans who need primary care and face a shortage of physicians. We mustn’t let Medicare scare another generation of medical students out of pursuing a career in primary care. We must stabilize the system by addressing the flawed SGR formula.
Finally, the SGR is a drag on the long-term health of the U.S. economy; a ball and chain that grows heavier with every day that passes. In 2005, a fix to the flawed payment formula would have cost $50 billion. Now, just six years later, we are faced with a $300 billion price tag. In just five years, the cost of a fix will double to nearly $600 billion. For years, rather than fixing the root of the problem, Congress has been practicing voodoo budgeting to circumvent a permanent solution, providing “doc fixes” each year and kicking the can further and further down the road.
Now, the Super Committee has the opportunity to cut us free of this ball and chain. It’s time to get honest, put a stop to voodoo budgeting and repeal the SGR. True deficit reduction cannot be achieved without addressing this systemic flaw in our nation’s largest health program.
Martin S. Levine, DO, is the president of the American Osteopathic Association