WASHINGTON, Aug. 1, 2012—According to the National Association of Independent Medical Equipment Suppliers (NAIMES), the Congressional Budget Office (CBO) has updated its analysis of the effects of the federal budget of alternative methodologies for a permanent “doc fix” addressing the gap between the Physician Fee Schedule and the spending limits required under the Sustainable Growth Rate (SGR) legislation. Two of the options, referred to as the “cliff” and the “clawback,” would avoid the decrease projected under current law—27 percent for 2013—and make up the difference in the future. The third would be to reset the SGR using 2012 as the baseline. Finally, Congress could replace the SGR with a different limit.
The cliff method would defer the cut required by the SGR for up to three years, after which the payment rates would drop to the rate that would have been in effect if the override had not occurred. CBO projected increases or decreases in spending, but did not include the percentages by which spending would drop for each year in this update. Depending on the length of the short-term update, the cliff—or the drop for the year after the short-term update—could range from 22 to 26 percent.
The clawback method would maintain the expenditure targets for each year and reduce payment rates each year until the difference between the original expenditure targets and the actual expenditures has been recouped. The law limits reductions to the change in the Medicare Economic Index (MEI) minus 7 percent. For most of the 10-year period, the maximum reduction would apply. Under this method the recoupment would take more than 10 years. CBO made no projections past 2022, however. The clawback costs more in the first few years because payment rates are higher, but the net cost after the recoupment period would be zero.
Congress has overridden the rates under the SGR every year since 2003, using both the cliff and the clawback methods to attempt to control spending. Most recently, since 2007, the cliff method was adopted. CBO also projected spending using two other methods: tying updates to the changes in the MEI each year, or simply setting the percentage increase, for example, to a 1 percent increase each year. Under either of the alternative methods, Congress could repeal the SGR. Finally, it could reset, or rebase, the SGR, forgiving the debt under the current SGR and using 2012 as the new base year. Learn more at www.dmehelp.org.
