NAIMES: Renewed interest in repealing SGR

HALIFAX, Va., Feb. 7, 2013—According to the National Association of Independent Medical Equipment Suppliers (NAIMES), the Congressional Budget Office released an analysis this week that reduced the cost of eliminating the Sustainable Growth Rate (SGR) formula by $107 billion. This new estimate has renewed efforts by some members of Congress to repeal the SGR once and for all.

The new projection in the CBO’s 77-page Budget and Economic Outlook: Fiscal Years 2013 to 2023, explains that repealing the SGR would cost $138 billion over the next 10 years—significantly less than the $248 billion priced in previous estimates. These lower costs are attributed to a decline in the rate of Medicare spending growth and lowered estimates for spending for physician services.

Although the SGR has been around since 1997, the reimbursement cuts under the formula have never taken effect thanks to the repeated interventions of Congress at the behest of physicians. With the renewed interest in ending the SGR comes an opportunity for Congress to address DME industry concerns with the DME bidding program. DME industry leaders will be upping the effort to repeal the current program based on the extremely low fees set for Round 2 contractors.

Many in the industry support repeal without any offset considering the unsustainable rates set by CMS that used low-ball bids. Diabetic industry representatives note that it is physically impossible for 15 contractors to serve the millions of diabetic patients and that none can survive at 72 percent off current fees. Efforts to replace the current program with a sustainable market pricing process will continue, but many suppliers and state DME association representatives indicate that the industry simply cannot afford to pay using currently proposed offsets. Several DME industry stakeholders note that suppliers should not have to pay for stopping a program that will destroy the DME industry, just as the 30 percent cut to physician payments would cause doctors to abandon Medicare in droves. While this is true, the DME industry will likely still be pressed for payment. Suppliers can perhaps convince Congress that this must be repealed without a pay for.

The bill referenced below could serve as a vehicle for repeal of CB. On Wednesday, U.S. Reps. Allyson Schwartz (D-PA) and Joe Heck, DO (R-NV) filed the Medicare Physician Payment Innovation Act to repeal the SGR and to create what they called “a clear path toward comprehensive reforms of Medicare payment and delivery systems.”

“There is no single greater threat to the long-term solvency of Medicare and seniors access to healthcare than the broken Medicare payment system, or SGR. Each year health care practitioners are faced with devastating cuts that could make it nearly impossible for them to continue providing care for Medicare beneficiaries. And each year Congress has avoided coming up with a serious solution to this problem,” Heck said in a media release touting the bill.

“This bill is that solution. Our seniors and their healthcare providers deserve a program that is immune to Congressional dysfunction and that would provide stability by replacing the currently flawed formula with a system that promotes efficient, cost-effective health care.” The bill would:

• Permanently repeal the SGR formula.
• Provide annual positive payment updates for all physicians for four years.
• Ensure access to preventive care, care coordination, and primary care services through increased payment updates for those services.
• Aggressively test and evaluate new payment and delivery models.
• Identify payment models to provide options for providers across medical specialties, practice types, and geographic regions.
• Stabilize payment rates for providers who demonstrate a commitment to quality and efficiency within a fee-for-service model.
• Ensure long-term stability in the Medicare physician payment system through predictable updates that accurately reflect the cost and value of providing health care services in coordinated care models.

The repeal bill has the support of key physician’s associations, including the AMA and the American Academy of Family Physicians. “By permanently repealing the SGR formula, we end repeated threats to physicians’ ability to provide care for Medicare beneficiaries,” Jeff Cain, M.D., president of the AAFP said in a media release.

“Equally important, this bill paves the way for innovations such as the patient-centered medical home. In doing so, it moves toward a system that improves quality while it restrains the growth in costs. We need to make sure our patients can get the right care from the right health care professional at the right time.” Learn more at www.dmehelp.org.