The slow-motion SGR train wreck

The debt deal is a piece of crap. At least part of it…

Raise your hand if you know what the SGR is. Okay, I’ll explain. Back in the ’90s, Congress decided to limit the growth of Medicare physician reimbursement through something called the Sustainable Growth Rate formula. Essentially, if reimbursement costs outpace estimates provided under the formula, physician pay is cut the following year to compensate.

For about the last nine or ten years, the formula has required cutting physician reimbursement—a move that would have resulted in open revolt among doctors if Congress hadn’t “fixed” the problem every time it’s come up. What Congress has done, every year, is grant physicians a slight increase in Medicare reimbursement (like 1%), while “owing itself” the cut required by the SGR. Every year this issue comes up, with a growing mathematical reduction in reimbursement required by law the following year, and every year Congress moves the problem one year into the future, making the SGR deficit larger in the process.

Currently, the law requires Medicare pay to be cut by 29% across the board on January 1, 2012. This is to make ends meet and pay back what is owed under the SGR. Here is where it gets interesting:

This problem was due to be addressed about a month ago in a bipartisan proposal that would have held physician reimbursement steady for 10 years, essentially scrapping the SGR and giving Congress a decade to work out how to balance the books or, more likely, just write it all off as bad debt.

But that’s gone now. The new debt law requires an additional 2% cut to Medicare reimbursement on top of the 29% already called for under the SGR. To be fair, that cut only goes into effect if the “Faker’s Dozen” can’t come to an agreement for slashing the cajones out of the federal budget.

Assuming the Faker’s Dozen does its job and avoids that automatic 2% cut, cuts to Medicare reimbursement will almost certainly be built into its proposal because all that money has to come from somewhere. If it doesn’t do it’s job, docs will be looking at losing almost 1/3 of their Medicare pay by January 1. The only way to avoid this, it seems, is for the Faker’s Dozen to come to a budget slashing agreement, then have the whole Congress turn around a month later and add however many billions it needs back into the budget to shift the SGR problem into the future once again.

In essence, before the end of the year Congress will either have to go public with its own hypocrisy by immediately adding to the problem it just “solved,” or it will sit idly by while physicians dump Medicare like a used piece of uranium. In fact, there’s a good chance that will happen anyway, because the opt-out period for doctors is in November, and if it looks like the Medicare will finally be taking its major pay hit, things are going to get very ugly.

The funny part, to me, is the way the debt deal has been spun in the papers: there will be no cuts to Medicare services. I’ve heard this a lot in the last few days. Only reimbursement will be affected. No problem. Don’t worry about a thing. But how many people will be accessing Medicare services if only 12 FRIGGING DOCTORS IN THE WHOLE COUNTRY ARE LEFT ACCEPTING MEDICARE??? Hmm. Better start lining up right now, even if you’re only 12…

The other funny part, to me, is that I have to wonder how many other short-sighted “both hands up the ass at the same time” bits were built into this bill? I mean, this is just the one issue I happen to know about…

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