Hawaii Vision Clinic Explains The Insanity of Medicare & Sustainable Growth Factor

Albert Einstein once stated that the definition of insanity is repeatedly doing the same thing and expecting a different outcome. This adage could easily be applied to the Sustainable Growth Rate as it is related to the costs of Medicare. The laser surgery and contact lenses experts at Aiea’s Hawaii Vision Clinic further elaborate on this topic.

Costs within the Medicare system perpetually increased quicker than predicted as soon as the program was launched. Seniors were given an entitlement to medical services, increasing the demand, while doctors were allowed to charge their customary rates and did so.

These rising costs resulted in the Health Care Financing Administration to rein in spending in the form of price control for physicians’ services. This didn’t work and in 1983, HCFA began a fee freeze on Medicare payments to doctors for three years. During this period, Medicare spending drastically increased as doctors had to maintain income and raised the volume of services provided, resulting in fewer quality services and potentially harming older patients with diabetes.

In 1989, HCFA stopped paying doctors based on their UCR charges and focused on the Resource Based Relative Value System, which assigned monetary value amounts to different medical services. Non-participating physicians could only charge a bit over the Medicare “maximum allowable charge,” increasing the physician Medicare participation rate.

Eight years later, the Medicare Modernization Act introduced the SGR. This act based Medicare physician fees on total program performance of the prior year. If cumulative Medicare spending were above a certain target, payments to physicians would be frozen or completely cut in the current year.

Predictably, this causes the total spending to increase. The Medicare Payment Advisory Commission (MedPac) recently reported that from 2002 to 2012 Medicare spending on doctor services per beneficiary rose by 72%. During that decade, a 9% increase in rates was dwarfed by the growth in volume of physician services, including lab tests and imaging.

If SGR doctor pay cuts had been allowed to take place, doctors would now be getting paid pennies to see Medicare patients. This would have forced numerous physicians out of Medicare entirely.

So, what is the solution? A bill just passed by the House of Representatives and awaiting Senate action gets rid of the SGR, yet preserves Medicare price controls and an arbitrary update formula guaranteed to be substandard. It also favors newer forms of managed care, including the Accountable Care Organization. Sadly, these are doomed to fail.

Since much of the problem can be linked back to price controls and direct payment of doctors through mandatory assignment, we should do away with these. Congress should be resolute about Medicare physician payments going through patients and restore the right to balance bill. This would not only moderate total spending, but payments would likely remain flat, as the volume of services would swiftly decline.

Hawaii Vision Clinic is dedicated to offering medical advice and information to their patients. They also specialize in glaucoma and cataracts correction, glasses, Lasik and cataract surgery. For more information about their services, visit their website or call (808) 487-7938 today.