With expected SGR-generated cuts in Medicare physician reimbursement looking like 10% for FFY 2008, the AMA is gunning for Congress to replace the SGR with a different approach: simply indexing physician payments and budgeting accordingly.  The AMA this week reports a survey showing many members would cut back on Medicare participation if the reimbursment cuts continue, and goes on to advocate change:

It is critical that a permanent, long-term replacement for this payment formula be identified as it is producing disastrous effects. In addition to generating the forecasted 40 percent pay cuts by 2015, the formula:

  • Has kept average 2007 Medicare physician payment rates about the same as they were in 2001
  • Has prevented physicians from making needed investments in staff and health information technology to support quality measurement
  • Punishes physicians for participating in initiatives that encourage greater use of preventive care in order to reduce hospitalizations
  • Has led to a budget baseline that is widely viewed as unrealistic and that has driven policymakers to enact short-term interventions that have increased both the duration of cuts and the cost of a long-term, permanent solution

According to the Kaiser Network’s Daily Health Policy Report, the AMA is mounting a $2 million campaign to replace the SGR. However, the Report continues:

A permanent reform of the SGR formula is "not likely" this year "unless lawmakers have a significant change of heart," CQ HealthBeat reports. Senate Finance Committee Chair Max Baucus (D-Mont.) in February said, "I think we’re still at the point where we have to deal with this on a yearly basis. I think we’re going to get there, but I don’t think this year" (CQ HealthBeat, 6/5). House Ways and Means Health Subcommittee Chair Pete Stark (D-Calif.) also has indicated that he does not expect a permanent SGR reform to be implemented this year (Atlanta Journal-Constitution, 6/5).

Controlling unit cost is one way to go about cost control.  However, a more sensible approach would look more globally at all categories of costs, the ways in which they interrelate (preventive care vs. emergency care, etc.), and develop paradigms for care that are evidence-based and more cost-effective when measured on a longer timeline.

(Sidebar:  Here’s a recent post about cost control in a different context — implementation of Massachusetts’ universal health care law.)

Physicians who are utilization outliers in high-reimbursement procedures are probably not in the first ranks of those pounding the table about SGR.  See the latest in a long string of stories about overutilization of expensive procedures coming out of the Dartmouth Atlas project, as reported in today’s NY Times.

David Harlow