Healthcare/Long-Term Care Financing

Short-Term Fixes to the Sustainable Growth Rate Process . 4.2.1 The UAF Floor

An option that retains some cost-containment incentives but does not lead to negative payment updates is to set the UAF floor such that the largest over-spending penalty would completely offset the MEI. Under this option, the floor is a negative percent that would be just large enough in magnitude to offset the MEI, producing a 0-percent update.

Short-Term Fixes to the Sustainable Growth Rate Process . 4.2 Changes in the Design of the UAF

As indicated in the summary discussion of the current SGR update process, the magnitude of the UAF is a key determinant of the size of Medicare payment updates. Without the UAF portion of the SGR process, payments would be updated using the MEI. The UAF is the means by which the update process recovers over-spending.

Short-Term Fixes to the Sustainable Growth Rate Process . 4.1 Changes in the Measure of the Costs of Practice

The MEI is a fixed-weight input price index reflecting average annual changes in prices for inputs required to produce physician services, namely the physician’s own time and practice expense. The MEI is an important ingredient in the SGR process, affecting payment updates in two ways (Figure 2). The measure is used directly in the c

Short-Term Fixes to the Sustainable Growth Rate Process . 4.0 Potential Refinements of the SGR

Short-Term Fixes to the Sustainable Growth Rate Process . 3.2 Current Law Baseline

On the surface, study of the SGR payment process is straightforward. The process can be described as a recursive model, consisting of a set of algebraic relationships that are linked over time. This view, however, is somewhat naïve, as noted above. Changes in data alter future but not past values of SGR process relationships, and prediction

Short-Term Fixes to the Sustainable Growth Rate Process . 3.1 Methods

Analysis of the SGR process might be helpful in setting the stage for refinements that can be implemented to overcome current flaws resulting from the formula, as well as suggesting longer run changes that might be considered for more substantive changes to the payment update process in the future. A spreadsheet model of the SGR process was cons

Short-Term Fixes to the Sustainable Growth Rate Process . 3.0 Modeling the SGR Process

Short-Term Fixes to the Sustainable Growth Rate Process . 2.2.3 Criticisms of the SGR Process

Advocates for SGR reform cite significant flaws with the current process. First, recent updates have been large and negative, a consequence of over-spending. A string of negative updates has pressured Congress to intervene legislatively, as large and widespread changes in provider behavior are necessary to overcome the negative impacts on paym

Short-Term Fixes to the Sustainable Growth Rate Process . 2.2.2. The SGR Process

The VPS was replaced with the SGR process, following passage of the Balanced Budget Act of 1997. As was VPS, the SGR process was designed to allow for increases in Medicare payments while ensuring that growth in aggregate spending would be contained. 4 Unlike the VPS when it was replaced, the SGR system produces a single update. Figure 2.

Short-Term Fixes to the Sustainable Growth Rate Process . 2.2.1 History

Over time, a variety of policy measures designed to help contain costs has been incorporated into the Medicare program. But policymakers have also demonstrated concerns with maintaining efficiencies and not introducing policies with incentives that distort the health care system and lead to undesirable distributional outcomes. Prospective paym

Short-Term Fixes to the Sustainable Growth Rate Process . 2.2 Physician Payment Policy

Short-Term Fixes to the Sustainable Growth Rate Process . 2.1.2 Decomposing Spending Growth

Some of the changes in spending displayed in Figure 1 are due to changes in price and changes in the number of Medicare beneficiaries over time. Year-to-year changes in total spending were decomposed into changes attributable to price, the number of traditional fee-for-service Part B program beneficiaries, and intensity – changes in ut

Short-Term Fixes to the Sustainable Growth Rate Process . 2.1.1 Per Beneficiary Spending

On a per beneficiary basis, SGR spending increased from $1,371 in 1996 to $2,376 in 2004 – a total of 73 percent (61 percent of spending if drugs and lab tests are excluded) (Table 1). It is clear that growth in spending varies by type of service from one year to the next, as changes in price (as measured by the update), impact most ty

Short-Term Fixes to the Sustainable Growth Rate Process . 2.1 Spending Trends

Medicare allowed charges increased from a total of just under $45 billion in 1996 to almost $82 billion in 2004, a 51 percent increase (Figure 1) 2 . Most of this spending was for physician services included in spending estimates used in the SGR payment update process. If spending on chemotherapy and other drugs and on lab tests are subtracted

Short-Term Fixes to the Sustainable Growth Rate Process . 2.0 Background

Short-Term Fixes to the Sustainable Growth Rate Process . 1.0 Purpose and Overview

There has been considerable recent interest in revising the Sustainable Growth Rate (SGR) process of updating payments to physicians and other providers under the Medicare program. Researchers at the Centers for Medicare & Medicaid Studies (CMS) and with the U.S.

Short-Term Fixes to the Sustainable Growth Rate Process . Executive Summary

Purpose: This report assesses effects of a variety of refinements to the current Sustainable Growth Rate (SGR) Medicare physician payment update process. A spreadsheet model of the SGR process was developed to examine changes in conversion factors (CFs) and program spending in response to changes in the SGR process, including changes to

Short-Term Fixes to the Sustainable Growth Rate Process

Final Report Presented to: Lynn Nonnemaker DHHS/OS/ASPE Presented by: NORC at the University of Chicago 1350 Connecticut Ave, NW, Suite 500 Washington, DC 20036 (202) 223-6040

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Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. Footnotes

The process used is similar to that used by the Bureau of the Census to establish final family weights in the March CPS. A description of the CMS data is available at: http://www.cms.hhs.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage We controlled for worker wage levels, industry, firm size and other characte

Cost and Coverage Impacts of the President’s Health Care Reform Proposal and a Congressional Tax Credit Proposal. 10-Year Estimates

We projected the cost of the two proposals over the 10-year period, 2009 through 2018. Note that when projecting program enrollment and costs, we assume a 40 percent phase-in for 2009 and an 80 percent phase in for 2010, with the program reaching ultimate enrollment beginning in 2011. Therefore, the 2009 impact estimates in our projections dif

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