Healthcare spending in 2013 grew at the slowest rate since 1960, according to a recent article in Modern Healthcare. According to federal data, the nation spent $2.9 trillion on healthcare last year, which was an increase of 3.6% from the prior year—and the weakest spending growth since 1960. Reasons cited for the slowdown include aftermath from the Great Recession, changes in health benefits, and federal healthcare spending rollbacks triggered by the Affordable Care Act. For example, Medicare spending increased in 2013 by 3.4%, down from 4% growth in 2012. Spending on technology and construction to upgrade or expand healthcare services dropped during the recession and still has not rebounded. Most analysts don’t expect this growth slowdown to carry into 2014, although quarterly national estimates for 2014 suggest spending growth below 4%. While some of the slowdown in healthcare spending growth may be attributed to doctors and other healthcare professionals running more efficient practices, health spending in 2013 still consumed 17.4% of the US gross domestic product.
Whether their political persuasions lie left, right, or center, almost all physicians agree that something permanent needs to be done about the sustainable growth rate (SGR) formula used for physician reimbursement under Medicare. Unless some legislative action is taken between now and March 31, 2015, a 21 percent cut in physician Medicare reimbursements will take effect on April 1. So, is the newly constituted Congress ready and willing to act?
Not surprisingly, the answer to that question depends on whom you talk to, according to a recent MedPage Today article. Douglas Holtz-Eakin, PhD, former director of the Congressional Budget Office and current president of the American Action Forum, says “all eyes should be pointed toward 2015” for action on SGR, because the current lame-duck session is unlikely to take much action on health care. However, after the lame ducks hobble home, Holtz-Eakin predicts movement in Congress toward answering the $180 billion question: how to pay for an SGR repeal.
Caroline Pearson, vice president of the healthcare consultancy Avalere, isn’t so optimistic. “I don’t think the SGR will have a permanent fix…until after the 2016 election,” she told MedPage Today, adding that “the ‘pay-fors’ are everything.” Hoping for a Republican president to work with beginning in 2017, GOP members of Congress will fight for entitlement reform that will include an SGR fix, Pearson predicts, opining further that “an SGR fix is unlikely as a standalone [bill].”
If Congress approves another one-year “patch” of the current SGR-based system in early 2015 instead of a repeal, it will be the 18th time over 12 years that legislators have passed such temporary stopgaps. In recent years, both the AMA and the AAOS have staunchly opposed short-term “doc fixes” in favor of a once-and-for-all scrapping of the SGR.
What do you think—will Congress repeal the SGR during 2015?
Links to previous OrthoBuzz coverage of SGR:
Currently, each year more than 300,000 Americans sustain a hip fracture, and that number is expected to rise to more than 500,000 within the next 20 to 30 years. A new study– based on a literature review, analysis of Medicare claims, and input from clinical experts–finds that the average lifetime societal benefit from surgery to repair hip fractures reduced the direct medical costs of the surgery by $65,000 per patient. Collectively, that results in an estimated $16 billion lifetime societal savings. These savings include reductions in length of and intensity of postinjury care, and the amount of required long-term medical care and assistance required by surgery patients relative to those whose fractures are treated nonsurgically. The study, published in Clinical Orthopaedics and Related Research, also found that the quality-adjusted life years in people with surgically treated hip fractures increased 2.5 years for patients with intracapsular fractures and 1.9 years for those with extracapsular fractures. To view a summary of the article, read here.
Up against an April 1 deadline that would see Medicare payments to physicians plunge by nearly 24%, a bipartisan group of Congressional negotiators introduced legislation that would repeal Medicare’s sustainable growth rate (SGR) formula and replace it with an annual 0.5% pay increase for five years. The proposed legislation contains additional provisions designed to transition Medicare from a pay-per-procedure system to one that promotes value through alternative payment methods (APMs) and rewards physicians for engaging with APMs. Those provisions include:
- A consolidation of three existing Medicare quality programs into one
- Incentives for care coordination
- Involvement by physicians in developing clinical guidelines, performance measures, and APMs
- Making provider-specific quality and utilization data more publicly accessible
Before we hail this as the epitome of bipartisan success, it should be noted that the legislation in its current form does not detail how Congress would pay for a permanent SGR repeal, which is estimated to cost between $120 billion and $150 billion. That significant detail will be debated if and when the full membership of both chambers considers the bill. Congress has been at similar SGR crossroads before and ended up passing short-term “patches” without permanently revising what everyone agrees is a failed formula.
David Glaser, JD, alerts us to proposed changes in the healthcare reimbursement model that would make employing physicians less appealing for hospitals. MedPAC, the Medicare Payment Advisory Commission, issued a report that details a discrepancy between higher reimbursements for services rendered in hospitals relative to those for the same services provided in clinics. Simply put, more Medicare money is available to compensate physicians when they are in a hospital outpatient setting. This MedPAC report proposes an end to the added “facility fee” that drives the discrepancy by leveling reimbursements across the board in all settings. MedPAC recommendations are not binding, and Congress has the final say about Medicare reimbursements. But in Glaser’s opinion, “the days of additional facility fee payments are numbered.”