March 26th, 2015
For years now it has become apparent that the Sustainable Growth Rate (SGR) system is not sustainable. However, fixing the SGR will require increases in budgeted costs, and so one of the major barriers to replacing the SGR is figuring out how to pay for the fix. Towards this end, it is important to understand the appropriate cost-comparison.
Federal scorekeepers (appropriately) assess the cost of the SGR fix relative to current law, which assumes that fees will follow a trajectory defined by current policy. But as near as I can tell, few advocate for that path or believe it will occur; rather the current system will continue to require regular “patches”. Therefore, the appropriate measure of the cost of the doc fix is spending with the fix relative to spending without it. The latter includes the costs of future “patches” necessary to ensure continued operation (as well as any savings that can be achieved because of continued SGR related negotiations). Substituting this realistic alternative into the cost calculus likely substantially lowers the incremental cost of any SGR fix.Read the rest of this entry »