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Deficit-reduction plan includes repeal of Medicare sustainable growth rate
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President Barack Obama’s proposed deficit-reduction plan includes alterations to the Medicare and Medicaid systems that will reportedly save more than $300 billion over the next decade.
Among the plan’s proposed changes are a repeal of the Medicare sustainable growth rate and a freeze in Medicare rates. Used to determine physician Medicare payments, the sustainable growth rate (SGR) would be replaced with legislated fee-schedule updates over the course of 10 years.
“Overall, these proposals will save $248 billion in Medicare over 10 years and $73 billion in Medicaid and other health programs,” the plan reads. “Even though these reforms can and will save money, they also will strengthen these vital programs and ensure that they are robust and healthy to serve Americans for years to come.”
In a recent presentation to Congress, the Medicare Payment Advisory Commission (MedPAC) labeled the current SGR system “flawed,” citing its focus on aggregate expenditures, its lack of differentiation by provider and the 29.4% Medicare payment rate cut scheduled to occur in January should no congressional action be taken.
Repeal of the SGR would reportedly require a 10-year freeze of the current payment levels for primary care along with 5.9% reduced annual payments for all other specialties over a 3-year period — followed by a freeze.
In all, the MedPAC report estimated that the 10-year costs would be around $200 billion offset by other cuts to the health care system.
In a release, the American Medical Association (AMA) praised the proposed repeal of the SGR.
“The AMA commends the President for recognizing that any serious plan to address the deficit must include a repeal of the Medicare [SGR] formula,” AMA board member Peter W. Carmel, MD, stated in the release. “Honest accounting of our nation’s debt should not assume $300 billion in Medicare physician cuts, which Congress has rejected repeatedly because of the significant, detrimental impact those cuts would have on patients’ access to care. Many bipartisan deficit reduction plans have called for repealing this flawed formula while achieving substantial deficit reduction totals.”
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