‘Tis the Season for Speculation About Medicare Sustainable Growth Rate Reform

Ken Perez
Ken Perez

Guest post by Ken Perez.

This is the time of year for speculation regarding which teams will play in the various college football bowl games, but also, unfortunately, whether Congress will finally pass a permanent repeal of the unpopular Medicare Sustainable Growth Rate, which once again threatens to impose a sharp decrease to the physician fee schedule, reportedly 24.4 percent on Jan. 1, 2014.

Just as most every college football team had a sense of optimism when the season began, throughout the summer and fall it seemed like politicians on both sides of the aisle were, to switch metaphors, singing from the same hymnal, railing against the Medicare Sustainable Growth Rate and arguing for a permanent “doc fix.” And, of course, physician groups provided supportive background vocals.

But here’s the problem: A permanent solution will be costly, very costly. According to the latest estimate by the Congressional Budget Office (from May), freezing (i.e., holding flat) all Medicare physician rates for 10 years would cost $139 billion, and proposals that are more generous to physicians would obviously cost more. The Medicare Sustainable Growth Rate remains the elephant in the room of deficit reduction. As for temporary patches, I’ve seen ballpark estimates of $18 billion for a one-year doc fix and $36 billion for a two-year freezing of rates, but both of those solutions would simply “kick the can down the road” yet again.

The latest news from our nation’s capital is that there’s not enough time for Congress to pass a permanent doc fix before the House recesses for the holidays on Dec. 13, and there are some murmurings about some sort of short-term patch that would freeze rates for one to three months to buy time for Congress to come up with a plan for a permanent solution, perhaps.

The latest, most promising proposal for a permanent Medicare Sustainable Growth Rate repeal was floated as a draft proposal by the chairs of the Senate Finance and House Ways and Means committees at the end of October. On Dec. 12, the Senate Finance Committee will hold an executive session to mark up the bipartisan and bicameral draft proposal, and it is hoped that the discussion will include specific sources of funding—so-called “pay-fors”—to cover the increased government spending that repeal of the Medicare Sustainable Growth Rate would entail. However, even if the pay-fors are identified, there will not be enough time for Congress to pass the bill before the holiday recess.

At this point, it looks like my college football team will definitely not be in the BCS National Championship Game, but playing in a less prestigious bowl is still possible.

In like manner, a permanent Medicare Sustainable Growth Rate solution is definitely not in the cards before the end of the December. Last year, the dire potential consequences of the “fiscal cliff” compelled Congress to cut short its holiday recess, and on New Year’s Day, the House approved a one-year doc fix as part of the fiscal cliff package passed by the Senate the day before. Look for a short-term doc fix proposal to start to work its way through Congress on or soon after Jan. 6, 2014, when the Senate convenes, with the House returning to work the next day.

As for a permanent doc fix—absent some conjuring of pay-fors totaling at least $139 billion by the Senate Finance Committee on Dec. 12—February would appear to be the next window of opportunity to include a permanent Medicare Sustainable Growth Rate solution as part of a more comprehensive deficit-reduction piece of legislation.

Ken Perez is the author of The Sustainable Growth Rate: The Elephant in the Room of Deficit Reduction and a healthcare IT and policy consultant in Menlo Park, Calif.

Write a Comment

Your email address will not be published. Required fields are marked *