The Future of the SGR: 2015 and Beyond

Kenneth J. Terry, MA


February 03, 2015

In This Article

Approaches That Purportedly Could Save Money

Medical associations would probably not support Brookings' proposal. But they do believe that the transition to APMs, which would be accelerated by the merit-based incentive program in last year's SGR bill, will lower Medicare costs in the long run.

Moving from fee-for-service to value-based reimbursement, Wergin said, would reduce ER visits and hospitalizations by encouraging physicians to improve preventive and chronic care and undertake more population health management. He cited studies showing that patient-centered medical homes saved money. Because the SGR bill promotes APMs such as medical homes, he said, it should cut Medicare costs.

This type of argument has been used before to justify lowering cost projections for certain legislative proposals. Democrats tried to use it to minimize the estimated cost of the Affordable Care Act, and the AAFP used it in arguing that Congress should maintain the parity between Medicare and Medicaid payments to physicians. But up to now, Hobson notes, the CBO, which estimates the cost of bills, has not bought the argument that improved population health can lower government costs.

Up to now, CBO cost estimates haven't reflected changes in behavior that would affect total output in the economy—an approach known as "dynamic scoring." But now that Republicans control both houses of Congress, they have enacted rule changes requiring the CBO to incorporate macroeconomic effects in cost estimates for certain kinds of bills. For the most part, Republicans want CBO to use dynamic scoring to lower the cost of their tax reform proposals.

It's unknown whether dynamic scoring could be applied to the SGR replacement bill, which would not affect more than a small percentage of the gross domestic product. Yet medical associations are looking at the possibility of using this tool to lower the estimated cost of the SGR measure. According to Wergin, AAFP lobbyists have already made this point to members of Congress.

Similarly, Wah told Medscape, "The options on the table can include dynamic scoring. In that discussion, we're hopeful that they'll recognize that by eliminating the SGR and improving the Medicare payment system, there are opportunities for savings overall."

However, he added, "We're not in a position to support any of these options at present because they're not a topic of discussion."

In the long run, Wah said, SGR repeal and replacement is "the only sane pathway" forward." Passing the SGR bill now, he stated, is "a way for Congress to show they're committed to taking action and getting something done," after being criticized for inaction in the past. "It would be a great way for Congress to start out by saying they've achieved a major piece of work and completed it early."


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