SGR Legislation is a Bad Deal for Beneficiaries

SGR Legislation is a Bad Deal for Beneficiaries

California Health Advocates supports a final and long-term solution to the physician payment formula known as the Sustainable Growth Rate (SGR). This is a long-time broken system that has needed to be repealed and replaced for years, but instead Congress has put in 17 temporary fixes. If no agreement is met by the end of the week, doctors will see a 21% cut in their payments from Medicare due to this outdated SGR.

Democrats and Republicans in both the House and Senate and our President are eager to find a permanent solution, yet funding this “fix” should not fall on the shoulders of beneficiaries. Under current proposed legislation half – $35 billion – of the $70 billion cost over 10 years is slated to come from the pockets of elders and people with disabilities. It’s proposed to come in the form of increased Part B premiums, an added deductible to future sold Medigap plans, and additional means-testing premiums for higher income beneficiaries. Yet, as pointed out from our advocacy partners, none of the $70 billion cost is slated to come from the pharmaceutical or health insurance industry. Medicare and our taxpayers are already overpaying these industries, yet those most able to afford the bill, are strangely absent from contributing to the cost of this legislation.

For example, if one item of the President’s 2016 proposed budget that addresses inappropriate overpayment of Medicare Advantage plans due to upcoding were adopted, that alone would save $36 million in 10 years. This would eliminate the need to make the above mentioned changes that shift the costs to beneficiaries.

Over 50% of our country’s more than 52 million Medicare beneficiaries have annual incomes under $23,500 and a quarter live on $14,400 or less.  Most of our country’s elders are on fixed incomes and tight budgets; if health care costs go up, other necessities such as food and housing suffer. While we support a permanent fix to the physicians payment formula, it must be a fix that is beneficial to both doctors and beneficiaries. We encourage Congress to find a solution that supports our country’s elders and does not hurt them.

Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.