Sustainable Growth Rate (SGR):  When You’ve Got Them By Their  Wallets, Their Hearts and Minds Will Follow

You take  my house when you take the prop

That does sustain my house; you take my life

When you do take the means whereby I live.

Shakespeare (1564-1616),  The Merchant of Venice

July 12, 2012-   The key word  these days on the Washington scene is “sustainable” – sustainable budgets, sustainable spending,  sustainable policies,  and, in the case of physicians,  the sustainable growth rate formula (SGR).  

For the last ten years,  the SGR has called for cuts in physician payments at the end of the calendar year.   This year the magic “cut” number is 27%. The cut never comes because politicians fear doctors will abandon Medicare. Adjustments are always made. The can is kicked down the road until next year.

President  Lyndon Johnson, best expressed government reasoning behind the SGR.   LBJ said, “When you’ve got ‘em by the balls, their hearts and minds will follow.”  Others  have cleaned this language  up to read, “When you’ve got them by their wallets, their hearts and minds will follow.”

This is basically the philosophy of managed care and government experts.   If you can rationalize or ratio money for doctors,  physicians  will dance to the payers’ tunes.  Costs will be reined in.

The trouble with this approach is three- fold.

One, doctors are an independent lot who think they often know more, or think they do,  than distant “experts,” and they always seem to find a way to sustain their incomes.

Two,  doctors want a livable wage.   They are going out of business at record rates because ever lower reimbursements make their practices “unsustainable.”

Three,  no magic replacement formula exists that will cover all types of doctors  in all situations or that will reward “value” and “performance” and replace volume of patients seen.

This article  from Health Leaders Media  nicely sums up the problem.

Physicians Weigh In on SGR Debate

Margaret Dick Tocknell, for HealthLeaders Media, July 13, 2012

Physicians added their voices on Wednesday to the intractable task of finding an informed solution to the sustainable growth rate. Sen. Max Baucus (D-MT), chair of the Senate Finance Committee, hosted five physician group representatives, part of a series of roundtables about Medicare payments. Previous roundtables featured former administrators of the Centers for Medicare & Medicaid Services and private payers.

"Every year, the flawed sustainable growth rate, or SGR, leads physicians to fear dramatic reductions in their Medicare payments," Baucus stated in his opening remarks. "Next year physicians will face a 27% cut if we don't act. While Congress has intervened to prevent these cuts each year, it is time we develop a permanent solution.

"We need to repeal SGR and end the annual ‘doc fix' ritual. The year-in and year-out uncertainty is not fair to physicians or the Medicare beneficiaries who need access to their doctors."

The discussion covered a wide range of topics, including models of care, specialty reimbursements, and quality and efficiency.

Sen. Baucus noted that physicians seem caught in what he described as "stove pipes of care. How do we get rid of some of these pipes?"

Speaking for the American Medical Association, Ardis D. Hoven, MD, said that a variety of new models of care coordination and payment such as medical homes and bundled payments hold promise of a more flexible system and will help. "We have to be accountable as physicians to make sure we are getting the job done and producing outcomes and quality in our work. These new models that are being tested now are going to give us that information, which we have never had before," she said.

There was general acceptance among the five speakers that while the SGR should be repealed, no single payment replacement system would suffice. Glen Stream, MD, president of the American Academy of Family Physicians, described a blended payment system—common among patient-centered medical homes—that includes a combination of fee-for-service (FFS), care management fee, and quality improvement payments.

FFS would cover procedures, treatments, and services; the care management fee would pay for continuity of care within the care coordination team, and quality improvement payments would reward physicians who use patient data to improve care.

The physicians at the roundtable emphasized rewarding quality and efficiency, and the difficulty of measuring those elements across the care continuum. "It isn't about how well I took someone's colon cancer out," explained Frank Opelka, MD, who represented the American College of Surgeons. "It's more about how well the 18 months of critical cancer care drove the best outcome for that quality.

Opelka called for a business model balanced "so everyone is aligned and we all have shared incentives."

Stream noted that the measures of quality outcomes should be different for specialists and primary care physicians because much of that care involves the treatment of chronic illness, where the payback for good outcomes might take years. For his diabetic patients, for example, treatment goals include keeping them off dialysis years down the road.

"We use proxy, short-term measures like blood sugar control," he said. "They aren't really outcome measures but the timeline is too long" to measure outcomes like avoiding amputations, which can be a threat to a diabetic.

With science and physician practice standards quickly evolving, "a Medicare payment system that truly rewards quality and efficiency must be nimble enough to reflect" those changes, cautioned Barbara McAneny, MD, who spoke on behalf of the American Society of Clinical Oncology. That will require "a robust infrastructure, including measure development and a system for detailed clinical data submission, reporting, and analys

After more than an hour of discussion, Sen. John Kyl (R-AZ) asked the question that everyone had been skirting. "What should Congress do in January 2013? As the experts, are you ready to present to us a process for a payment methodology that we could institute on January 1 and that would meet the objectives that we all agree on here?" He asked if an update of 1% or 2% next year with some reporting requirements and phased-in pilot programs would enable Congress to delay making specific changes across the board until 2014.

If Sen. Kyl was hoping for a magic bullet he didn't get it from the panel. "We're not going to be able to fix it by Jan. 1, 2013," stated Dr. McAneny. Referring to the reimbursement cut slated to go into effect in 2013, McAneny said it could put "many physician practices and hospitals out of business."

She added that physicians "need a time of stability where we can depend on Medicare not to pull the rug out from under our practices."

At the end of the roundtable, Sen. Baucus asked the physician groups assembled to create specific short-term and long-term SGR fixes for the committee to consider, saying, "We really need your help.

Tweet:   The SGR (Sustainable Growth Rate) Formula, which annually calls for dramatic cuts in physician Medicare payments,  shows no signs of being “fixed” by Washington officials.