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Obama to “supercommittee”: Fix SGR, but cut provider payments

First the good news: President Obama’s deficit reduction proposal to the so-called congressional “supercommittee” says that the Medicare sustainable growth rate (SGR) policy must be fixed in a fiscally responsible way and assumes that, in the short term, Congress will act to prevent 30% payment reductions before they go into effect in 2012.

On the other hand, the plan calls for $248 billion in Medicare cuts, with 90% of them from what euphemistically is called “reducing overpayments.” Although some may be related to fraudulent claims, much of that amount would come from unspecified reductions to provider payments.

Savings affecting beneficiaries would not start until 2017, and the president does not propose to change the Medicare eligibility age. 

The American Medical Association (AMA), which has been a strong supporter of Obama’s health policies, commended him for “recognizing that any serious plan to address the deficit must include a repeal of the Medicare [SGR].”

AMA President Peter W. Carmel, MD, went on to say, however, “Honest accounting of our nation's debt should not assume $300 billion in Medicare physician cuts, which Congress has rejected repeatedly because of the significant, detrimental impact those cuts would have on patients’ access to care. Many bipartisan deficit reduction plans have called for repealing this flawed formula while achieving substantial deficit reduction totals.”

According to the White House, the “President’s Plan for Economic Growth and Deficit Reduction” funds a proposed jobs bill and creates net savings of more than $3 trillion over the next 10 years in addition to the approximately $1 trillion in spending cuts called for by the recently passed Budget Control Act, which created the supercommittee to make budget-deficit recommendations to Congress.

The plan calls for $320 billion in health savings and claims the savings can be realized by “reducing wasteful spending and erroneous payments, and supporting reforms that boost the quality of care.”

For example, the White House plan calls for dedicating penalties for failure to use electronic health records toward deficit reduction, which it said would save about $500 million over 10 years beginning in 2021.

In addition, Obama is seeking to strengthen the Independent Payment Advisory Board (IPAB) and lower the target rate from the gross domestic product per capita growth rate to 0.5%. Under current law, if the projected Medicare per capita growth rate exceeds the predetermined target growth rate, now 1%, the IPAB is required to recommend to Congress ways to reduce that growth to meet the target without affecting beneficiary premiums or benefits.

The IPAB, whose members are appointed by the president, is opposed by more than 70 healthcare-oriented associations, claiming that the group is unaccountable to the public and potentially could interfere with the doctor-patient relationship.

Underscoring that his overall budget-deficit plan is designed to protect beneficiaries, Obama said he will veto any bill “that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share.”

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