AHA: SGR fix should not come at expense of hospitals

Congress should fix the long-disregarded sustainable growth rate formula (SGR), but not at the expense of hospitals, according to the American Hospital Association.

AHA President Rick Umbdenstock last week submitted testimony to the House Energy and Commerce Health Subcommittee, which is debating how to fix the SGR formula. The formula was created by Congress to curb spending by restraining the growth of Medicare reimbursements to physicians, but has not been deployed in more than a decade and was used only once since it was signed into law nearly 18 years ago.

"Congress needs to move away from cutting funding for services provided by other caregivers to pay for the physician fix," Umbdenstock told the subcommittee. "Offsets should not come from other healthcare providers, including hospitals, who are themselves working to provide high-quality, innovative and efficient care to beneficiaries in their communities and are being paid less than the cost of providing services to Medicare beneficiaries."

Hospitals have had to endure more than $120 billion in reimbursement cuts since 2010, including reductions in the Disproportionate Share Hospital program and the budget sequester, he added.

The SGR was based on a variety of complicated economic formulas that would determine how to pay physicians each year. However, as the costs of providing healthcare began outstripping general inflation, the formula began to move toward significant annual payment cuts, causing physician lobbies to balk at imposing the formula. Currently, there would have to be an approximately 24 percent cut to payments in order to align with the SGR formula. Instead, Congress has issued annual payment "patches" that have usually included modest payment increases.

Last year, a bipartisan agreement to repeal the SGR would have implemented 0.5 percent payment bumps for the next five years and encouraged physicians to engage in value-based initiatives. However, the bill was scuttled when it included language to repeal the individual mandate in the Affordable Care Act. During a press conference Monday to discuss the U.S. Department of Health and Human Services' new plan to aggressively move to value-based payments, officials said the goals align with last year's proposed SGR legislation.

Umbdenstock made several proposals  in his testimony that would cover any projected revenue shortfalls as a result of an SGR fix, with most focused on increasing and adjusting some premiums and co-payments made by Medicare enrollees.

To learn more:
- read the testimony (.pdf)

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SGR repeal deal reached 
Congress stalls Medicare doc payment cuts 
House readies for short-term SGR fix
House debates how to pay for SGR fix

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