Modern Healthcare

Article published October 6, 2011

By Rich Daly

Posted: October 6, 2011 - 2:30 pm ET

Ten years after first recommending that Congress replace Medicare's sustainable growth-rate formula, a divided Medicare Payment Advisory Commission suggested ways to pay for such a repeal.

The proposal, approved 15-2, would repeal the SGR, cut and then freeze most physician fees and cut a variety of other provider payments to cover the estimated $200 billion cost. “If Congress elects to try to finance SGR repeal solely out of Medicare, it is a tough path,” Glenn Hackbarth, chairman of MedPAC, said before the vote. The physician component—reducing the 10-year SGR cost by about $100 billion—would freeze Medicare rates for most primary-care physician services while cutting other physician services by 5.9% for three years and then freezing those rates for seven years. The largest savings in the nonphysician component of the SGR replacement plan—worth about $220 billion over 10 years— include 34% from drugmakers, 15% from beneficiaries, 11% from hospitals and 6% from durable medical equipment cuts. Members of the commission said the move was intended to spur congressional action on repealing and replacing the Medicare physician payment formula. Providing the specific offsets was portrayed by MedPAC members as part of their fiduciary duty to Congress, even while they stressed their hope that legislators would ultimately fund such changes through means outside their purview, such as malpractice reform. The proposed cuts drew opposition from two physician MedPAC members and from physician advocates who addressed the panel after the vote. The “unintended consequences” of such Healthcare business news and research

changes, they warned, could include more physicians dropping out of Medicare and its beneficiaries losing access to care. Separately, the commission recommended that Congress increase both potential financial penalties and rewards for physicians who participate in accountable care organizations.

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changes, they warned, could include more physicians dropping out of Medicare and its beneficiaries

losing access to care.

Separately, the commission recommended that Congress increase both potential financial penalties

and rewards for physicians who participate in accountable care organizations.

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