The United States spends more than $125 billion annually on cancer care. By 2022, there will be 18 million people with cancer and by 2030 cancer incidence is expected to rise by 2.3 million new cases per year. The high cost of cancer drugs and the “buy and bill” model of paying for them under Medicare have received significant attention. But other factors, such as highly-variable practice patterns and a lack of meaningful engagement of patients in care decisions, have also been called into question.
With the cost of repealing the Sustainable Growth Rate for Medicare Physician Payment lower than ever, many suggest that 2014 is the year that permanent change may finally be realized. This toolkit provides a brief summary of the history of the SGR, including the recent actions by the House Energy and Commerce, House Ways and Means, and Senate Finance committees to repeal and reform the flawed physician payment system.
Congress is as close as it has ever been to scrapping the Medicare sustainable growth rate (SGR) for an alternative system of paying doctors based on the quality – rather than the quantity – of services.
Despite slower health care spending growth over the last few years, long-term forecasts for overall health spending – and for public programs like Medicare – signal continuing concern. The idea behind numerous recent proposals is to find lasting solutions, and some areas of consensus are beginning to emerge.
Many employers have begun to adopt a strategy known as “reference pricing” to help reduce health care costs. Under this benefit design, employees get insurance plans that set price caps on certain services and procedures. Enrollees are allowed to use any provider. But if they use providers with fees higher than the “reference price,” they must pay the difference between the reference price limit, determined by the employer or insurer, and the actual charge.
Health care policy leaders are counting on public and private initiatives, such as paying for performance, to improve value in the health care equation in which cost and quality at times seem to be at odds.
The pace of health care consolidation is accelerating. Over half of hospitals were exploring a possible merger in 2013, and half were also planning to purchase physician practices. The dollar value of those acquisitions declined, however, as recent purchases have been less about megamergers and more about smaller entities as the newer targets of acquisition.
With millions of people projected to obtain health insurance coverage under the Patient Protection and Affordable Care Act (ACA), access to care is expected to be an issue. Efforts to promote telehealth and telemedicine could help.
Recent proposals to combine the two main parts of Medicare would mean streamlining deductibles and other cost-sharing for beneficiaries. But health care policy experts are cautioning that such a change is complicated and requires analysis. A July 22 briefing explored the impact on beneficiaries.
The federal government currently spends about 15 percent of its budget on Medicare, and the program faces substantial growth in beneficiaries as baby boomers continue to age into eligibility. A June 3 briefing, “Medicare for the 21st Century,” addressed the sustainability of Medicare under its current design.
The Patient Protection and Affordable Care Act (ACA) calls for increased consumer involvement in health care decision-making. Transparency in price and quality as a tool for consumer engagement is a critical component of that process. One does not buy food, clothing or housing without comparison shopping. Yet in health care, equally important and typically a large part of the family budget, consumers have not had the tools to compare prices and quality of the product they are buying. The data are spotty and the little data that are available are not consumer friendly.
The public is keeping a close eye on federal budget deficit reduction efforts this year, including potential automatic spending cuts initially mandated by the Budget Control Act of 2011. Yet one component of the debate has been largely ignored - the Sustainable Growth Rate (SGR). Indeed, because of the SGR, physicians in January 2013 faced a 26.5 percent cut in Medicare reimbursement rates. Last-minute congressional intervention delayed the cut until January 2014 as part of the American Taxpayer Relief Act of 2012. Without intervention, physicians will receive a 25 percent reimbursement cut in January 2014. At the same time, according to the most recent Congressional Budget Office (CBO) estimates, if Congress and the president agree to permanently eliminate the SGR, the deficit will grow by another $138 billion over 10 years. The cost of repealing the SGR has fallen significantly since last year, spiking a new interest in permanently fixing the problem.
Proposals to fix the Sustainable Growth Rate (SGR) abound and there is agreement that policy makers must take action, but the question of how to reach a permanent solution remains. The SGR originated as part of the Balanced Budget Act of 1997 to control federal Medicare spending. Congress began overriding the SGR in 2002 and has continued to delay scheduled physician reimbursement cuts ever since. Medicare physician payments were maintained at their current rates in 2012 as a result of The Middle Class Tax Relief and Job Creation Act of 2012. Most recently, Congress extended payment rates until January 2014 as part of the “fiscal cliff” negotiations.
Health spending in the U.S. climbed to $2.7 trillion and constituted 17.9 percent of the nation’s gross domestic product (GDP) in 2011. A recent report released by actuaries at the Centers for Medicare and Medicaid Services (CMS) found that health spending as a share of GDP remained steady at 17.9 percent from 2009 through 2011. Despite that stability, some analysts warn that, as the economy improves and the population ages, cost increases could again accelerate. Effects of cost constraining provisions in the Patient Protection and Affordable Care Act (PPACA) are largely unknown, since major provisions will not be implemented until 2014.
With Americans living longer, some policymakers are proposing to gradually raise Medicare’s eligibility age from age 65 to 67 as part of a broader package to reduce the federal debt. The later starting point is projected to reduce federal spending by $113 billion over the next decade, according to the Congressional Budget Office, which estimates that most people would gain insurance coverage through other sources.
As Washington attempts to steer clear of the “fiscal cliff,” it is important that policymakers, stakeholders and the public have a clear understanding of the components of this key policy crossroads and the likely consequences of inaction – on everything from expiring tax cuts to debt ceiling increases to scheduled budget reductions. The goal of a Nov. 16 briefing was to foster that understanding.
Urgent care centers and retail clinics are rapidly emerging within the health care system — a partial response to rising health care costs and a possible flood of new demand for care as the Patient Protection and Affordable Care Act is fully implemented. The number of patient visits to retail health clinics grew by 1,000 percent in just the last two years, according to a RAND Health study.