This article is more than 5 years old. Information may no longer be current.
MedPAC provides Congress with two alternatives to current SGR payment system
An option applies targets on a geographic basis and extends the system to all of Medicare, not just doctors.
Click Here to Manage Email Alerts
As physicians face a 9.9% Medicare payment cut next year, the Medicare Payment Advisory Commission offered Congress two alternatives to the current system: Repeal the standard growth rate or create an expenditure target system that would apply to all Medicare providers.
The Medicare Payment Advisory Commission (MedPAC) made the recommendations in its March 1 Report to the Congress. The report provides alternatives to the sustainable growth rate (SGR) system, as required by the Deficit Reduction Act of 2005.
Specifically, MedPAC suggested two actions: The first calls for Congress to repeal the SGR formula and "accelerate the development and adoption of approaches to improve incentives for physicians and other providers to furnish care of lower cost and higher quality," according to the report.
Under this proposal, Congress would not replace the SGR with a new expenditure target. Instead, it would change payment incentives, collect information and improve program integrity.
"If [Congress] pursues this path, the Congress would need to make explicit decisions about how to update physician payments," said MedPAC chairman Glenn M. Hackbarth, JD, in a March 6 statement before the Subcommittee on Health of the House of Representatives' Committee on Energy and Commerce.
Under the second option, Congress would replace the current SGR with a new expenditure target system, which would extend to all of Medicare — not just physicians. Such expenditure targets would be geographically based and providers would receive data on their practice patterns as well as patterns of other Medicare providers.
"Providers would have an array of options for sharing in gains resulting from their improved efficiency. If they choose not to do so, however, updates under the expenditure target and possible other initiatives to reward performance would govern their payment," the report said.
While MedPAC commissioners could not reach a consensus on which option to recommend, "[We] are united on one point: An expenditure target is a useful reform tool only if coupled with new payment systems that create better incentives," the report said.
"Medicare has a total cost problem, not just a physician cost problem. Moreover, producing the optimal mix of services requires that all types of providers work together, not at cross purposes," Hackbarth stated.
For more information:
- Report to the Congress: Assessing alternatives to the sustainable growth rate system. Medicare Payment Advisory Commission. March 2007. Available at: www.medpac.gov.
- Assessing alternatives to the sustainable growth rate system. Statement of Glenn M. Hackbarth, JD, before the Subcommittee on Health, Committee on Energy and Commerce, U.S. House of Representatives. March 6, 2007. Available at: www.medpac.gov.