UPFRONT

Not a Solution

Peter K. Kaiser, MD

With great fanfare, the Senate passed the Sustainable Growth Rate (SGR) and Medicare Provider Payment Modernization Act (MACRA) of 2015, and on April 16, President Obama signed it into law.

The Act amended the Social Security Act to: (1) permanently repeal the sustainable growth rate (SGR) to prevent it from affecting the annual conversion factors that pay us for Medicare patients; (2) establish an update to the single conversion factor from 2014 through 2018, increasing our payments by 0.5% annually; and (3) then freezing any updates to the single conversion factor from 2019 through 2023.

So what is the SGR, and why is it so bad? It seemed reasonable that, if physician spending grew more rapidly than the gross domestic product, payments would be decreased, a.k.a. the SGR. It was meant to give an incentive to doctors to be more efficient, and by and large, it worked until 2002, when we faced our first big pay cut.

Then, two things happened. Congress had to continuously veto the SGR, and physician services continued to increase. So the annual ritual led to larger and larger SGR cuts. Was this doctors trying to game the system, or was it a product of the increased healthcare utilization and aging of our population? Likely it was a little of both because all of us are working harder now than ever before, and our average salaries have largely remained unchanged.

Our payments after 2019 would be based on a Merit-based Incentive Payment System (MIPS), which really consists of performance scores from the government, rather than on the volume of patients seen or procedures performed. The interesting factor is that the government has not come up with the measures of performance in any meaningful way.

Also, for every doctor who wins with MIPS, there is one who loses because it is a zero sum game. Who wins? Doctors who provide good quality care, use resources efficiently (eg, who don’t appear as one of the top docs in the CMS database), meaningfully use electronic medical records, and perform clinical practice improvement activities.

Because Congress has not published guidelines about these factors, we are left scratching our heads about what to do. CMS was kind enough to publish our payments and resource utilization (on the Physician Compare Web site), but I doubt they will publish our quality because the metrics are currently ridiculous and have not been shown to improve quality in any way.

The good news is that Congress finally fixed the flawed SGR that was enacted in 1997 and was deployed once, which required short-term Congressional action 17 times to prevent it from going into effect. The current “fix” stood at a whopping 21%.

The bad news is we gave a lot in return and agreed to a very uncertain future, not to mention the estimated $214 billion the bill will cost that everyone knows will need to come from somewhere. How it all plays out over the next few years will be interesting to say the least, but I am sure it will also be pretty painful.