Mark Plaster here, author of EP Monthly’s Night Shift column, guest blogging on WhiteCoat’s Call Room.
On October 21, the Senate defeated the procedural vote to close debate (cloture) on the bill to eliminate the sustainable growth rate formula (SGR), thus killing the bill. Was that a bad thing or a good thing? That depends. In the short term, it looks like a very bad thing for physicians. After all, if the SGR isn’t eliminated aren’t we slated to get whacked by a 21% across the board drop in Medicare fees at the end of the year? The bill, introduced by Debbie Stabenow (D-Mich.) called for the SGR to be reset to zero and would have eliminated the $245 billion “debt” the government owed to physicians. “What debt?” you may be asking. To answer that, you will need to put on your accountant green eye shades and go back with me to 1997.
In 1997 when the SGR became law it was intended to match the growth of payment to physicians through Medicare with the growth in the economy. If the economy only grew 3%, then payments to physicians should only rise 3% or face a cut in the following year’s reimbursement. On its face, it might make sense to some. For example, if an office call cost $100 in 1997, and the economy only grew 3%, then an office call should only be $103 in 1998. But the law failed to account for the increasing numbers of Americans who were entering the ranks of the retired and using Medicare. Nor did it take into account the increased costs of advancements in medicine. Consequently, Medicare continued to spend more than it planned, money that it had to borrow. Seven times Congress threatened to pull the costs back in line. And each time we physicians howled until they relented and increased the rates. Now Medicare has a $245 billion dollar debt, with more on the horizon if the spending isn’t brought in line.
Enter Senate Majority Leader Harry Reid (D-Nev) who supposedly struck a deal with AMA President James Rohack, MD. The Senate would ‘forgive the debt’– read “no cuts in Medicare reimbursements” – if the AMA would support the President’s health care reform bill when it got to the floor of the Senate. That’s why the Stabenow bill did not include a new mechanism for payment to physicians, just an elimination of the SGR and a reset to zero. The AMA had supported the House version of health care because it too contained provisions that would eliminate the SGR, increase payments to primary care physicians while not lowering pay to specialists. But the House bill had a fatal flaw. Douglas Elmendorf, the director of the Congressional Budget Office (CBO) noted that the bill was not budget neutral, one of President Obama’s promises. So the Stabenow bill seemed like a bill that had something for everyone. Physicians escape the planned cuts in reimbursement and the Democrats get to move $245 billion off the books, making the Senate bill look budget neutral.
“It’s perfectly obvious why the Democrats want to resolve this issue outside the larger debate over healthcare,” Sen. Mitch McConnell (R-Ky) said on the Senate floor. “They’re doing it so they can say their healthcare plan doesn’t add to the deficit. It’s a gimmick, and a transparent one at that.” But even some budget conscious democrats couldn’t back the bill. Sen. Kent Conrad (D-ND) said he wouldn’t vote for the SGR bill unless its cost was offset.
Then it began to emerge what the AMA had considered giving away in the future to get the immediate relief from SGR. While the ‘debt’ was wiped out by the Stabenow bill, the Senate bill would limit increases in Medicare payments to 0.5% in 2010 and would cut Medicare by 25% in 2010.
At the time of this writing Rohack has refused to comment on any deal that had been reached behind closed doors on the Senate bill. But it all seems rather moot now. The Democrats didn’t deliver the respite from SGR. So it’s unclear whether the AMA will come through with it’s support of the President’s plan when, or if, it ever comes to the floor of the Congress.
