Medicare Panel Calls for Repealing Sustainable Growth Rate Formula

Ten days after Congress voted to approve a temporary "doc fix," the Medicare Payment Advisory Commission last week released a blueprint that calls for permanently repealing and replacing the sustainable growth rate formula -- which is used to determine Medicare physician reimbursement rates, Modern Physician reports (Daly, Modern Physician, 1/11).

Background

Earlier this month, President Obama signed "fiscal cliff" legislation (HR 8) that included a provision to delay for one year a 26.5% reduction to Medicare physician reimbursement rates and freeze reimbursement rates at current levels.

The doc fix would cost about $30 billion over 10 years and will be funded in part by cuts to Medicare and Medicaid payments to hospitals (California Healthline, 1/3).

Blueprint Details

The commission -- which has supported SGR repeal for 12 years -- offered the same plan that it first proposed in 2011.

Under the proposal, the cost of replacing the SGR would be paid for by a range of pay freezes and cuts to providers. The proposal will be formally presented to Congress on March 15 as part of MedPAC's annual report (Modern Physician, 1/11).

MedPAC Against Payment Rate Increases for Hospice, Long Term Care Hospitals

In related news, MedPAC on Friday unanimously voted to recommend against increasing payment rates for hospice programs and long term care hospitals in 2014, CQ HealthBeat reports.

The commission reviewed data comparing the cost of providing the service involved with the amount of Medicare payments received. The data showed that Medicare payments for hospice care on average were 7.5% greater than the cost of providing the service in 2010.

Meanwhile, the Medicare margins at long term care hospitals averaged 6.9% in 2011 and are expected to average 5.9% in 2013, according to MedPAC staffer Dana Kelley.

The figures and other data led commission members to conclude that current payment levels are adequate.

However, MedPAC Chair Glenn Hackbarth said the current payment rates would not be sustainable if the automatic 2% spending cuts under sequestration take effect (Reichard, CQ HealthBeat, 1/11).

The legislation to avert the fiscal cliff delays the across-the-board cuts outlined in the sequester -- which include a 2% reduction to all Medicare reimbursement rates -- by just two months (California Healthline, 1/3).

MedPAC estimated that eliminating a payment update to long term care hospitals in 2014 would result in between $50 million and $250 million in savings in 2014, and less than $1 billion in savings over a five-year period.

For hospice services, the commission estimated savings between $50 million and $250 million in 2014 and between $1 billion and $5 billion in savings over five years (CQ HealthBeat, 1/11).