On Monday, September 19, 2011, the Medicare Payment Advisory Committee (MedPAC) issued its proposal regarding repeal of the Sustainable Growth Rate (SGR). The SGR has become a significant point of discussion over the last few years as a scheduled cut in physician payment has been continually delayed. In January 2012, the SGR is scheduled to cut physician payment by 30 percent. However, the projected cost of repealing the SGR is $300 billion. In light of current debt talks and the impending 30 percent cut, MedPAC has released its proposal to mitigate the financial impact ofrepealing the SGR. One of the main tenets of the proposal is to realign the fee schedule by reducing the conversion factor for non-primary care physicians by 5.9 percent over the next three years and then freezing payment rates for the following seven years. The conversion factor for primary care physicians would be frozen for the entire 10 year period. This realignment is projected to save approximately $100 billion of the total $300 billion. MedPAC also suggests additional offsets, such as reducing payments to clinical labs and changing the skilled nursing facility payment structure.
In addition to these specific measures for reducing the projected cost of repealing the SGR, MedPAC recommends the following actions: 1) Collect data to improve payment accuracy; 2) Shift Medicare payment policies away from fee-for-service models; and 3) Encourage physicians to join and lead Accountable Care Organizations (ACOs) by offering greater shared savings for those in two-sided risk models.
MedPAC is accepting comments about the proposal before submitting a final version of it to Congress in early October. For more information on the MedPAC release, ACO formation or physician fee schedules, please contact the experts listed below at PYA, (800) 270-9629.
