Medical Device Daily Washington Editor

WASHINGTON – The sustainable growth rate mechanism (SGR) designed to control the expansion of Medicare Part B doctors' fees has almost never been put into play, and the most recent bill for Medicare funding continued the Congressional habit of "kicking the can down the road," as a member of Congress has put it (Medical Device Daily, July 11, 2008).

At this week's hearing on the growth of Medicare Part B doctors' fees, several witnesses proposed partial solutions to the ever-rising cost of getting a Medicare beneficiary into and out of a doctor's office, but one witness said he is not optimistic about the chances that a change of reimbursement might stanch the flow of excess dollars to docs.

However, a greater emphasis on primary care was nearly universal in the discussions.

Rep. Pete Stark (D-California), the subcommittee chair, said of SGR, "each year, we have intervened to prevent the cuts," and "I don't know anyone who seriously advocates letting these cuts go into effect.

"Kicking the problem down the road began when Republicans were in control" of Congress, Stark said, but he acknowledged that Democrats "didn't do anything" either. "I strongly suggest we don't follow this practice anymore," he said.

Stark said that Congress has heard "a long list of options, but nobody has offered to bell the cat." And he indicated that he is not particularly sympathetic to the cries of medical professionals.

"I want to interject a prejudice," he said. "I think it has been somewhat disingenuous for physicians to cry poverty" based on "piece-work rates. I suspect there are a large number of physicians who are making way north of $100,000 a year" on Medicare Part B, "but the physician community is very close with that information. I have yet to see sanitized tax returns" that disprove the assertion.

"I've heard all kinds of threats [from doctors] that we're not going to deal with Medicare payments' and I don't believe that," he said.

The ranking minority member, Dave Camp (R-Michigan), said, "The importance of the doctor-patient relationship is critical, and there is nobody who wants to cut doctor payments by 20% by 2010" in reference to the cuts of almost 11% that would take place should SGR's mechanism finally be put into play.

Camp said he was "disappointed that there was no consideration of the Senate's compromise bill" on Medicare funding offered by a group led by Sen. Chuck Grassley (R-Iowa), but he seconded Stark's assertion that both parties and both houses are guilty of short-term fixes that "made the following year's problems even worse."

"It's a bad habit we have to kick once and for all," Camp said.

Bruce Vladeck, PhD, senior health policy advisor at Ernst & Young (New York), said it is important "not to over-estimate the ability to change healthcare" by tweaking reimbursement. He said substantial reorganization is called for, and that it is "not clear to me that you can change things by changing reimbursement."

Vladek said that while changes to Medicare's fee structure in the early 1990s pushed primary care relative to specialties, that flow "has been reversed as a result of the process by which the resource-based relative value scale [RBRVS] is revised." This, he said, "is encouraging the proliferation of high-fee diagnostic procedures," among others.

Of fee-for-service, Vladek said, "nobody has come up with a totally satisfactory alternative," and even nations that have lower overall spending use it. "The British model of paying a capitated rate is still a minority" approach, he said, but "even for plans that receive capitated payments, they've largely moved away from capitated payments to fee for service for a variety of reasons."

Vladek argued that the small physician office is part of the problem, stating, "we'd be better off in a lot of ways" if more doctors worked in large, multiple-specialty practices rather than in "atomized fee-for-service practices."

Gail Wilensky, PhD, a senior fellow at healthcare think tank Project Hope (Bethesda, Maryland), said, "In general, Medicare has moved toward bundled payments except in the way it reimburses for physician services.

"The problem I see with SGR is that while it can control total spending, [problematic] behavior occurs at the level of the individual physician," which is unaffected by total spending, she said. "Conservatively practicing physicians face continually low fees," Wilensky said, while doctors who abuse the system make more.

Wilensky said, "simply removing the spending target ... would open the program to unsustainable spending increases and would not promote the development of improved quality or accountability."

An alternative might be to develop an SGR or spending target applied at the individual practice level. In this scenario, some type of risk adjustment would probably be necessary for small practices or for practices that had a small Medicare population, she said.

"Primary care appears to be undervalued by any measure," Wilensky opined, adding that she supports "moving toward a more aggregated bundle of services" to cover a greater range of activities undertaken by specialty physicians.

Nancy Nielsen, MD, PhD, president of the American Medical Association (Chicago), said, "We are facing a projected shortage of physicians by 2010," adding that doctors "need a stable payment system that allows physicians to do what we want to do, which is help patients."

She said that because baseline spending numbers are warped when SGR cuts are not implemented, Congress should "reset the baseline to reflect actual spending, [which] would form a rational base for redesigning a new system."

She added: "We support confidential feedback to physicians" on quality and resource use.

Stark asked Nielsen about AMA's position on regional variations in resource use that seems unconnected to risk adjustment. He said the evidence "seems to suggest that there's a correlation between the number of specialists in an area and how much specialty care is used" with no discernible benefit for outcomes.

Nielsen responded, "We're very concerned about the information we've received from the Dartmouth atlas," adding that any such variances "need to be studied."