There is great celebration in the healthcare community about the repeal of the Medicare Sustainable Growth Rate (“SGR”). All the healthcare-related and other media are abuzz reporting on the jubilation:
- Becker’s Hospital CFO Report
- Health Leaders Media
- Modern Healthcare
- Kaiser Health News
In fact, the only comparable celebration that I can recall occurred on the death of the Wicked Witch in the Wizard of Oz. Actually, the repeal of the SGR and the witch’s death are more alike than different.
For years, the SGR has terrorized physicians. Every December and into the following new year, physicians had to wait to see whether their reimbursement from Medicare would be reduced by some double-digit percentage. Recently, physicians have been pawns for Democrats and Republicans trying to make points (perhaps “ping pong balls” is the better metaphor), with their livelihoods held hostage until some form of political rationality prevailed.
According to the summary/analysis of MACRA prepared by the Staffs of the House Energy and Commerce and Ways and Means Committees:
The legislation repeals the flawed Sustainable Growth Rate (SGR) formula and replaces it with the bicameral, bipartisan agreement to return stability to Medicare physician payments. The SGR formula is a cap on aggregate spending on physicians’ services where exceeding the cap resulted in punitive recoupments in subsequent years. The formula was passed into law in the Balanced Budget Act of 1997 to control physician spending, but it has failed to work. Since 2003, Congress has spent nearly $170 billion in short-term patches to avoid unsustainable cuts imposed by the flawed SGR. The most recent patch will expire on March 31st. Based on H.R. 1470, the bicameral, bipartisan unified Committee bill to replace the SGR, this policy removes the imminent threat of draconian cuts to Medicare providers and ensures a 5-year period of stable annual updates of 0.5 percent to transition to a new system. The new system moves Medicare away from a volume-based system towards one that rewards value, improving the quality of care for seniors.
The Medicare Access and CHIP Reauthorization Act, or MACRA for short, has been praised by President Obama who has promised to sign it. The 324-page Congressional print of MACRA does a lot of things in addition to repealing the SGR, including the following:
- Extension of the Children’s Health Insurance Program (“CHIP”) for two years
- Development of “alternative payment models” away from fee for service and toward quality of care
- Strengthening of Medicare’s ability to fight fraud and build on existing program integrity policies
- Additional $7.2 billion for community health centers
- Increasing Medicare premiums for some seniors and elimination of Medigap policies starting in 2020 from covering Medicare deductibles for new beneficiaries
Thank goodness that most of us do not have to scrutinize every business deal we do to make sure that it is fully compliant with self-referral and kickback prohibitions. In the healthcare arena, compliance with these counter-intuitive and overly punitive restrictions adds much unreimbursable administrative costs to the delivery of healthcare. Hopefully, shifting payment from procedures to quality of care will reduce the artificial inducements to violate these restrictions.
And while I advocate the repeal of these outdated self-referral and kickback laws which have unfairly burdened physicians in this country for decades, there is always another example of why the laws are still needed.
Benchmark Reporter has this story today:
2 U.S. organizations have been fined with a whopping $48.5 million in charges of conducting unnecessary medical tests linked with doctors who are responsible for referring patients to them for commission. These scamming corporations are Health Diagnostics Laboratory (HDL) and Singulex, both are well-known cardiovascular disease screening labs.
The Benchmark story is based on the Thursday announcement from the Department of Justice. According to the DOJ announcement, this is what the Labs did:
As alleged in the lawsuits, HDL, Singulex and Berkeley induced physicians to refer patients to them for blood tests by paying them processing and handling fees of between $10 and $17 per referral and by routinely waiving patient co-pays and deductibles. In addition, HDL and Singulex allegedly conspired with BlueWave to offer these inducements on behalf of HDL and Singulex. As a result, physicians allegedly referred patients to HDL, Singulex and Berkeley for medically unnecessary tests, which were then billed to federal health care programs, including Medicare.
And a reminder of why kickbacks are bad (some people apparently need to be reminded):
“When health care companies pursue profits by paying kickbacks to doctors, they undermine a patient’s ability to trust that medical decisions are being made for scientific reasons, not financial ones,” said Acting U.S. Attorney Vincent H. Cohen Jr. of the District of Columbia. “Those kickbacks also harm the taxpayer because they drive up the cost of federal health care programs with medically unnecessary tests. This significant settlement shows our determination to work with whistleblowers and our federal partners to defend the integrity of the health care system from illegal agreements that hurt patients and taxpayers.”
If this were a blog about the Seven Deadly Sins, the key words might be Greed, Pride, Envy, and Sloth.
There is no easy way for physicians to make more money. Working hard is not enough. And the current state of financial health of physicians in this country is appalling.
Nevertheless, there are physicians who are good providers, who are devoted to their patients, and who follow the law. I know this because I represent many of them. They resist the temptation from these Labs and others like them. They spend a lot of money on attorneys and consultants to do things the right way. When they see their colleagues benefit through illegal behavior, it is good that they also see them caught and punished.