Medicare panel wants to ax doctor spending target

If Congress adopts the suggestion, it would fundamentally change the way Medicare calculates physician pay increases.

By Jane Cys, AMNews staff. March 19, 2001.

Washington -- The Medicare Payment Advisory Commission in mid-March recommended that Congress eliminate a key -- and occasionally controversial -- component of the physician fee schedule known as the sustainable growth rate.

The SGR, a target spending level for physicians, is one of the factors used to calculate annual updates to Medicare rates. Payments for services rise or fall depending on whether actual physician spending exceeds, meets or falls below the target.

"After reviewing the design of the SGR system, MedPAC concludes that it cannot maintain payment rates at the right level," the report states. "The system does not adequately account for all relevant factors that affect the cost of providing physician services."

The AMA has never been fully behind the SGR system and is encouraged that MedPAC is taking another look at it, said AMA Board of Trustees Chair D. Ted Lewers, MD. But "our concern with this recommendation is: How do we know what they're going to be replacing [the SGR] with?"

The SGR's problems stem from several factors, according to the MedPAC report. They include the difficulty in setting an appropriate target for physician spending and the unrealistic goal of urging individual doctors to reduce the number of services they provide.

"It has troubled us that we use a very different [update] system for physicians than we do for the rest of the health care system," added Gail Wilensky, PhD, MedPAC chair.

The commission recommended that Congress consider creating a new approach that better accounts for physicians' costs of providing Medicare services. MedPAC didn't spell out an exact replacement formula that would accomplish this goal, but commissioners did offer some observations. [...]