Medicare Payment Reform — Proposals for Paying for an SGR Repeal — NEJM

Medicare Payment Reform — Proposals for Paying for an SGR Repeal — NEJM:

The Medicare Payment Advisory Commission (MedPAC) has been recommending SGR repeal since 2001 but, until now, has never identified a way to cover its cost. On October 6, MedPAC voted 15-to-2 to recommend replacing the SGR with a “predictable 10-year path of legislated (physician) fee-schedule updates” and paying for the repeal by reducing Medicare payments to various providers and suppliers. Specialists' fees would be reduced by 5.9% for each of 3 years and frozen for the next 7 years. Fees for primary care services delivered by geriatricians, internists, family physicians, pediatricians, nurse practitioners, clinical nurse specialists, and physician assistants would be frozen for all 10 years. MedPAC estimated that the lower provider payments would save Medicare about $100 billion over 10 years, although Medicare spending on physician services would almost double during that period — increasing from $64 billion to $121 billion — because Medicare's population would expand and the volume and intensity of delivered services would continue to increase. The estimate is based in part on 73% growth of Medicare spending for physician fee-schedule services between 2000 and 2010 (from $37 billion to $64 billion) — a much faster growth rate than that of payment updates or practice costs (see graphGrowth in Medicare Spending for Physician Services, 2000–2010.). Other organizations would face the following payment cuts over 10 years: pharmaceutical companies, $75 billion; post-acute-care facilities, $45 billion; hospitals, $25 billion; clinical laboratories, $10 billion; durable medical equipment makers, $13 billion; and health plans, $13 billion. Medicare beneficiaries would be subject to increased cost-sharing requirements and, for those who carry supplemental coverage, a Medigap excise tax ($33 billion).

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