American Urological Association offers concrete solutions to sustainable growth rate problem

July 1, 2011

Despite the nation's budget crisis, the fact that Medicare reform is being discussed and a near-30% cut in Medicare physician fees looms in January appears to be providing some incentive for lawmakers to get serious about reforming the system used to pay doctors who treat patients under the program.

"Let's all accept the premise that SGR has to go," Rep. Michael Burgess, MD (R-TX), declared during a hearing on the Medicare sustainable growth rate payment formula held in May by the House Energy and Commerce Subcommittee on Health.

Last December, President Obama signed a short-term fix that delays scheduled cuts through 2011. However, when that measure expires Jan. 1, 2012, physicians will face a 29.5% cut unless the system is changed before then or another temporary reprieve is enacted. The president's 2012 budget would freeze payments at 2011 levels for the next 10 years at an estimated cost of $298 billion.

In response to a subcommittee request, the AUA submitted recommendations on what to do about the SGR and how to fund the cost of reform. The AUA pointed out that physician practice costs have dramatically escalated while revenue continues to decline. Medicare Part B expenditures on physician services are now 18%, down from 22%, the AUA said.

"No one has any incentive to rein in costs," wrote Datta G. Wagle, MD, who was AUA president when the AUA submitted its recommendations. "Each constituent is trying to maximize their own benefit by trying to survive without looking at the entire cost. As such, the system is currently getting the exact outcome it was designed to obtain as multiple factors lead to increased costs."

Those factors, he said, are defined patient benefits, explosion of new treatments and technologies, extension of lifespan, unrealistic patient expectations, liability-driven test ordering, and lack of shared responsibility by all sectors of the system.

Hospital reimbursement 'major factor'

Hospital reimbursement is a major factor, Dr. Wagle said, and with current payment policies causing more physicians to become employed in hospital-based facilities, it costs Medicare more because hospital-based payments are higher than payments for the same services in a private practice office.

"Any proposal to replace the SGR must be coupled with addressing Medicare expenditures across the entire spectrum of health care and should include hospitals, drugs, medical equipment, medical devices, supplies, and home care," he told the subcommittee in the AUA's letter.

The AUA's proposed solutions to replace the SGR included:

"We respectfully ask that the Committee continue to include all physicians, and particularly specialty physicians, in this critical dialogue," Dr. Wagle wrote. "Urology is committed to helping our lawmakers to find an equitable and workable solution."

Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.