PRACTICAL CONCERNS: The Unsustainable SGR

Mac Sterling, MD and Melvyn Sterling, MD

Making predictions is difficult, especially about the future.
    —Niels Bohr

Every time American physicians celebrate a temporary reprieve from a Sustainable Growth Rate (SGR) mandated cut in Medicare compensation, the bottles of champagne are uncorked with a little less gusto, a little more battle fatigue. As of the end of 2014, we have opened 17 bottles of this ill-tasting brew. If Congress fails to approve an SGR patch by this March, all Medicare physician providers will see a cut of 24% on their next Medicare check.

After years of watching the Sword of Damocles hang over our heads—by threads of the narrowest Congressional majorities—we physicians are manifesting the negative consequences of living under the perennial assault of financial insolvency. And it’s not just physicians. It is also their patients. The harvest of the grotesquely misguided SGR policy has been served up to the general population of Medicare beneficiaries, and they are getting sick from it—or at least they are not getting medical help to alleviate their sickness.

How many of us are no longer accepting new Medicare patients compared to 10 years ago? What is the effect of this reduced access to care on the quality and quantity of life for seniors? Members of Congress can throw seniors under the bus—there is no Hippocratic Oath for politicians. But physicians did take that oath, and we have an obligation to protect our patients individually and to advocate for their well-being on a national level.

Some observers criticize this argument as being self-serving. They say we are trying to milk the national purse for our own enrichment. The actual fact is that the cost of providing patient care since the inception of the SGR has increased 24% while physician compensation from Medicare has increased by only 4%. If primary care, and being a physician in general, was so well compensated, we would not be facing major physician shortages in the coming decade.

Like unpredictable shocks to a lab rat, the unpredictable SGR patches have left physicians in an anxious ferment, not knowing how their balance sheets will look from year to year. Ironically the SGR—a scheme designed by Medicare—increases fiscal uncertainty and decreases physician investment in electronic health records and other costly practice improvements, thereby hindering efforts to improve the quality of care for Medicare beneficiaries. But diminished quality is not the only issue that plagues any argument against repealing the SGR; there is also the issue of diminished access to care for seniors.

Primary care physicians suffer the worst damage from the SGR. On the one hand, they experience increased attrition due to the closures of bankrupt medical practices. On the other hand, replenishment of their ranks is diminished because of the chilling effect that SGR-induced financial insecurity has on steering medical students toward primary care.  

The SGR was formulated in 1997 to address the relentless increase in the cost of Medicare. Currently, Medicare and Medicaid account for 22% of the national budget. The SGR automatically cuts Medicare payments to doctors whenever Medicare spending exceeds growth in the overall economy.

The primary failure of the SGR is that it mandates the same cut in payment to all doctors providing Medicare services, irrespective of issues of quality or efficiency of care. As both physicians and the nation try to improve the quality of care that we provide to our citizens, it is imperative that financial incentives be aligned with the provision of high quality, efficient care.

With these concerns in mind, several members of Congress wrote a bill last year that would repeal the SGR and replace it with a law known as the SGR Repeal and Medicare Provider Payment Modernization Act of 2014. Provisions in the bill called for streamlining Medicare quality reporting rules and giving higher payments to physicians who participate in quality improvement programs such as the Patient-Centered Medical Home.  

Had the bill passed, it would have guaranteed a 0.5% annual increase in Medicare payments each year for five years, as opposed to the 24% decrease that will occur if Congress fails to patch the SGR in March. Although the idea of an annual increase is laudable, 0.5% is grotesquely inadequate. Which grocer, gas station operator or plumber is going to accept such constraints and still provide their products or services?

The American demographic continues to shift toward the elderly. According to estimates, the number of Medicare beneficiaries will grow rapidly. The current number (52 million) is expected to increase to 73 million by 2025.

Who will care for them? The Association of American Medical Colleges projects that there will be a shortfall of 130,000 physicians in America within 10 years, and that half of that shortfall will occur in primary care. The SGR formula does nothing to ameliorate this decline. Indeed, the SGR is partially responsible because primary care physicians, as the relative low earners in the medical field, are more vulnerable to practice closure from revenue shortfalls. They are also prone to burnout from hamster-wheeling so they can see enough patients to make ends meet.  

Niels Bohr, his reticence to make predictions aside, would have been confident in predicting this: either the SGR will be scuttled, or Medicare beneficiaries will see a further decline in their access to care. Anyone care to bet their health on it?

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Dr. Mac Sterling is a hospitalist at Alta Bates Hospital in Berkeley. Dr. Melvyn Sterling is an internist and palliative care physician in Orange County.
Emails: Mac Sterling: maclsterling@yahoo.com; Melvyn Sterling: macpml@gmail.com