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Friday, October 16th 2009

Expand Coverage, Save Money

[zdvideo width=550 height=420 theme=simple2 border=no]http://www.youtube.com/watch?v=ahXC4DF4CkU[/zdvideo]

And we’re back to a discussion of the Sustainable Growth Rate.

Excuse a physician for tying healthcare reform efforts back to the SGR. In the eyes of any physician, with even a tangential interest in policy or how they’re paid, all of healthcare policy centers around Medicare reimbursement and more specifically the SGR (and maybe tort reform). Eliminating the SGR, and chiming for its yearly postponement, has been the almost singular lobbying focus of organized medicine for the past decade plus.

The Sustainable Growth Rate formula “originally was designed to control Medicare utilization by reducing physician fees. The primary drivers of utilization, however, are new or improved technologies, increased beneficiary awareness of potential treatment options, and a general shift from inpatient to outpatient care. Physician behavior controls none of these factors.”

Whether you agree or disagree with the points of that statement, the Sustainable Growth Rate remains a growing political hairball. Each year Congress routinely passes legislation to prevent the cuts in Medicare physician reimbursement from going into effect. However that simply makes the projected cuts for proceeding years larger. In 2010, if nothing were to be done, physicians would be facing cuts of 21.5% across the board for all services.


Numbers Are So Sexy…

There’s nothing new there. Every year it’s the same story, only the cuts get larger. Every year, with some jockeying from doctors the cuts are forestalled. And it is a major deal to doctors, or at least the ones who take the time to participate in the politics of healthcare (and by that I mean participate in organized medicine). And it is a major deal for healthcare reform. It is so much of a major deal that I would argue the Sustainable Growth Rate was the major deal in the American Medical Association signing on to HR 3200. The House bill scraps the SGR in full.

And you see, we’re back to a discussion of the Sustainable Growth Rate.

The Senate Finance Committee’s healthcare bill, which has gotten so much attention with its ‘bipartisan’ grab of Senator Snowe, does nothing for the Sustainable Growth Rate. And that has some critics crying foul. Not just organized medicine and physicians either.

The criticism is that the bill (and healthcare reform in general) is set to cost far more than the proponents, the legislature, the government bodies counted on to tack estimated price tag onto bills are making it out to cost at present.

Senator Baucus’ bill got a major boost when the Congressional Budget Office scored it as having a positive play on the national deficit. In plain terms,

The report states that the Senate Finance Committee bill would reduce the nation’s uninsured population by 29 million people, cost $829 billion, and slash the budget deficit by $81 billion over 10 years.

The CBO report instantly generated momentum for Baucus’s bill and increased the chances it will pass his Finance panel. The official score also brings the Senate closer to a floor debate later this month on President Barack Obama’s signature domestic policy initiative.

Of course the bill did pass the Committee and even picked up Republican support, kind’ve, in the form of Maine Senator Olympia Snowe. All of this predicated on what the CBO said, providing political cover for support of the bill.

Almost immediately however the CBO scoring of the bill started to be picked apart by opponents. And the criticisms are not without merit. Amongst the many questionable assumptions that are made by the Congressional Budget Office is that the Sustainable Growth Rate will take effect as currently set to. Despite the fact that legislators have postponed the SGR cuts every year.

In basic, the CBO scoring of the Baucus reform bill counts on physician reimbursement in Medicare being cut by more than 20% next year in order for the bill to be deficit neutral (or in optimistic accounting actually move to reduce the deficit). Expand coverage and save money. It’s as easy as that.

But when CBO does its projections, it doesn’t take into account what Congress is likely to do — it looks only at the laws as written. That means that the much-discussed CBO estimates for the Senate Finance bill will only hold true if Congress allows the cuts in Medicare payments to doctors to go through.

Prominent non-partisan parties have chimed in that reform that is deficit neutral, in particular in the form of the Baucus bill, is a pipe dream.

Former CBO director Douglass Holtz-Eakin was even more [critical]. “What they’re saying is: ‘Your fantasies add up. I could say to CBO: ‘Hi, I’d like to make 5 million a year and live in a 125-room mansion. Does it work?’ And CBO says ‘yes,’ but that isn’t going to happen.”

It simply is not realistic that Baucus’ bill will save this country money. That might not be a full hearted reason to not support ‘his’ (the Gang of Six’s) move for reform but we should face that fact.

It is simply not realistic that the Sustainable Growth Rate cuts will come to pass and make the numbers add up.

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