Looking forward – August 2012

In the past decade, Congress has approved 14 pieces of legislation that have postponed reductions in Medicare physician payment, which would have been incurred due to the government’s continued use of the flawed sustainable growth rate (SGR) formula to calculate fees. Congress’ most recent action of this type occurred earlier this year, when legislators averted another steep cut in payment by passing a 10-month short-term patch.

Although these patches have offered some short-term relief to surgical practices and ensured ongoing access to care for Medicare beneficiaries, they provide no long-term stability and add to both the size of future payment reductions and the costs of permanently repealing the SGR. Indeed, the cumulative effect of Congress’ failure to repeal the SGR is a 27 percent cut in Medicare payment that is scheduled to take effect on January 1, 2013.

The American College of Surgeons (ACS), the surgical specialty societies, other medical associations, patient groups, and most members of Congress agree that this course of action must end. Disagreements arise, however, when the discussion turns to the development of a replacement for the SGR and how to fund its repeal. The ACS has developed a proposal called the value-based update (VBU), which we believe is a viable alternative to the SGR.

Need for repeal

The SGR was enacted as part of the Balanced Budget Act of 1997 and was intended to be used as a prospective measure for controlling the growth of Medicare payments for physician services. The premise behind the SGR formula was that it would set health care spending targets, which, if exceeded, would result in a proportionate cut in the physician payment the following year. However, this approach was ill-suited to account for both the volume and the complexity of physician services, let alone the unique needs of individual patients.

The College and other surgical and medical associations have maintained that a better way to reduce health care spending is through improved patient outcomes. Over the last year, the College’s Inspiring Quality campaign has successfully illustrated how quality improvement programs, such as the ACS National Surgical Quality Improvement Program (ACS NSQIP®), can improve patient outcomes and reduce costs. The VBU proposal is premised on the belief that higher quality care, better patient outcomes, and, therefore, reduced health care spending are achievable goals and that quality improvement programs can be incorporated into a more financially sustainable and patient-centered payment system.

Five principles

The VBU is based on the following five principles that the College and its allies believe must apply to any viable alternative to the SGR:

  • Complement the current quality-related payment incentive programs, such as the Physician Quality Report System, the Electronic Prescribing Incentive Program, and the Electronic Health Record Incentive Program, while making necessary adjustments to those programs to facilitate participation by specialists
  • Provide a model that would have been immune to the outcome of the Supreme Court’s decision on the constitutionality of the Affordable Care Act
  • Incorporate mechanisms that lead to improved quality of care and reduced waste
  • Account for the varying ability of different segments of the health care system to improve care and reduce spending
  • Create incentives for the provision of primary care services that appropriately and adequately address the needs of an increasingly complex patient population

At press time, the College and the surgical societies had developed a four-step plan for repealing the SGR and replacing it with the VBU. This proposal had not yet been finalized, but plans were in motion to roll out the VBU to Fellows over the course of the summer.

Time for change

Without question, a Medicare physician payment system that relies on the use of the SGR is unsustainable. It is time for Congress to muster the political will to repeal the SGR and replace it with a truly sustainable, patient-centric reimbursement mechanism.

The College’s leadership and the Division of Advocacy and Health Policy have worked very hard to develop what we believe is a viable and meaningful alternative to the SGR—a plan that makes the provision of high-quality, patient-focused care the key factor in determining how surgeons and other physicians are paid. We have introduced the concepts of the VBU and are continuing to schedule additional meetings to make improvements in the model with surgical specialty societies, other physician groups, and health care leaders and think tanks in Washington, DC.

We are also working with members of Congress to test the political waters for the establishment of the VBU Medicare physician payment system. As we further develop the plan, we are planning to hold an all-Fellow webinar to walk through the proposal and solicit input and answer questions from the College’s membership. As always, I look forward to hearing your feedback on this proposal. In the meantime, rest assured that the American College of Surgeons is working hard to repeal and replace the broken Medicare SGR formula with a model that is good for our patients, is appropriate for surgical practices, and inspires quality throughout the entire health care system.

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