No sustainable growth rate solution included in default deal

September 1, 2011

The national budget crisis that has consumed Washington threatens to worsen the outlook for physicians, urologists included, who hope to avoid a 29.5% Medicare payment reduction scheduled for Jan. 1, 2012 unless Congress acts once again to avert it.

Washington-The national budget crisis that has consumed Washington threatens to worsen the outlook for physicians, urologists included, who hope to avoid a 29.5% Medicare payment reduction scheduled for Jan. 1, 2012 unless Congress acts once again to avert it.

Hopes by organizations representing physicians that a deficit reduction deal could include an end to the Medicare sustainable growth rate (SGR) formula and reform the Medicare physician payment system did not materialize as a divided Congress wrangled to avert default. The cost, estimated to exceed $300 billion over 10 years, apparently could not be reconciled as lawmakers focused on cutting spending, not adding additional expense.

Now, as lawmakers must find savings in Medicare to help produce the savings now called for, the pressure will be on to find those savings without affecting benefits. That could very well mean reduced payments to physicians, nursing homes, and hospitals, as well as reduced subsidies to insurance companies that offer an alternative to government-run Medicare.

The AUA was one of 113 physicians organizations that urged congressional leaders and President Obama during the course of the deficit debate to repeal the SGR and reform the Medicare payment system.

"Any serious proposal to confront the fiscal challenges facing our nation, and the Medicare program in particular, must address the massive funding deficit caused by the repeated failure to replace the SGR," the groups said in a June 27 letter to the president and legislative leaders. "Though this deficit has been kept 'off the books' through budgetary gimmickry, it currently represents $300 billion in unaccounted for Medicare spending and poses a serious threat to the continued access to physicians and other providers for Medicare beneficiaries."

That $300 billion "debt" has accumulated since 2002, when the SGR formula began to annually call for reductions in Medicare reimbursements. On 12 separate occasions, Congress has intervened to prevent cuts from being imposed, and in 2010, five separate bills were passed to stop a 22% cut in that year alone.

Now, the formula calls for a 29.5% reduction to begin closing the funding gap.

"There is unanimous agreement that cuts of this magnitude would result in serious disruptions for the nation's elderly and disabled populations and cannot be allowed to occur," the June 27 letter said, warning that if Congress continues to push the cuts into the future, the cost will soon exceed $500 billion.