Wednesday, July 6, 2011

CMS 2012 Draft Payment Rules: Automatic Triggers Cause Huge MD Fee Cut

Today’s Managing Health Care Costs Indicator is $330 billion

The Centers for Medicare and Medicaid Services issued its draft 2012 payment rules yesterday. The  payment rules give modest increases to ambulatory facility fees, tie ambulatory surgery fees to quality reporting, and make some much-needed changes in imaging reimbursement.  

The headline is that these draft payment rules cut physician fees by almost a third, as required by the sustainable growth rate formula.   This is the automatic trigger that has been overridden by Congress every year (or more) since 2002.   Just about no one thinks this is a good idea.  Physician payment increases in Medicare have been substantially less than those offered by other payers, and in some communities it's hard to find a physician taking new Medicare patients.  

Click to Enlarge  Ginsburg, New England Journal 12/10 

The cost of physician services keeps on going up, and no efforts to lower utilization have worked - so the blunt instrument of threatened massive payment cuts continues to hang over physicians' heads.  The 10 year cost of eliminating the SGR payment cuts would be $330 billion.  

There's a lot of talk in Washington about establishing automatic triggers to prevent the government from overspending.   The SGR is an example of such an automatic trigger that has been in place for some time, through Democratic and Republican administrations and Congressional majorities.   We've proven in health care already that these triggers only work if they make sense and there is enormous political will to support them.  A singular problem with the SGR is that cutting physician unit payments is not an especially effective way to lower overall health care costs.

There has been an enormous amount of lobbying to reverse these cuts over the past decade.  We should expect a similar response to future cuts in government spending triggered automatically, especially those that don't make political or economic sense.

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