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Reality check: SGR cut really may happen

A House bill passed Tuesday that included a "fix" to the ongoing sustainable growth rate problem is expected to meet its demise in the Senate. If the bill somehow survives, President Barack Obama has threatened to veto it. Where does that leave doctors? Facing the likelihood of a 27.4 percent pay cut.

Congress has passed temporary patches to the SGR – the formula the Centers for Medicare & Medicaid Services uses to control Medicare payments to doctors – for nearly a decade.

Doctors and other members of the healthcare community, as well as lawmakers, have been clamoring for a permanent solution to the SGR problem. Many want it repealed but the big problem with that is how to pay for it. Estimates to abandon the physician payment formula run as high as $300 billion.

Supporters of a repeal hoped the Joint Selection Committee on Deficit Reduction would eliminate the SGR in their federal deficit reduction plan but the supercommittee failed to come up with a plan.

[See also: SGR debate intensifies.]

That means doctors are once again relying on Congress to postpone the impending cut. It's a scenario that Glen Stream, MD, president of the American Academy of Family Physicians, calls a "Lucy and Charlie Brown and the football thing," which has made doctors numb to the whole situation. This time around, that numbness may be dangerous.

"Doctors are sort of numb from this," Stream said. "It's concerning because I think there's a very serious chance that this cut could go into place and yet many practicing physicians have heard this years and years in a row and it always seems to get averted at the last minute. I think that they may not understand the gravity of the situation this time."

The House Republican payroll-tax-extension package passed Tuesday proposes a two-year fix of the SGR that would cost $39 billion. The Senate was expected to kill the bill on Wednesday but Senate Republicans managed to thwart the vote, leaving the bill – and doctors – in limbo.

"If you'd asked me … a year ago, I probably would have said it's very probable they'd put it off, but with Congress being so dysfunctional all year, I'm not willing to bet on that," said Jeffrey Milburn, MBA, CMPE, a consultant of the Medical Group Management Association's Health Care Consulting Group. "I think practices should at least be thinking about the possibility of a cut."

Milburn and Stream believe that if the cut takes place as scheduled there will be some immediate effects but that the full impact will phase in over time. "The dollar impact on the doctors will be fairly quick," said Milburn. "The impact on the patients – with people closing their practice or restricting new patients – that'll kind of phase in, I think."

If the cut takes effect on Jan. 1 as scheduled, doctors will start seeing an impact on their reimbursement by late January/early February, said Milburn, so it's important that practices evaluate how material the cut will be. As a result of the cut, some practices will not accept any new Medicare patients, others will drop all Medicare patients and some may even be forced to close.

But no one really believes that if the cut happens it will remain in place, said Stream.

"They're (lawmakers) talking about if they can't get a fix before they break for Christmas that they would just hold payments in January until they fix it," said Stream. While some practices could manage that, others can't, he said. "There's a lot of practices that are month-to-month in their financing and really could risk closing if they didn't have their Medicare payments coming in."

"It can't be overemphasized how important this issue is," Stream added. "I know Congress has a lot on its plate and their work is difficult and the financial challenges of the country are very real, but we've got to take care of our folks under Medicare. We have to provide payment to physician practices that allows them to do that."

Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.

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