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Medicare's Payments to Physicians: The Budgetary Impact of Alternative Policies Relative to CBO's March 2012 Baseline 1 (July 2012)

handle is hein.congrec/cbo10830 and id is 1 raw text is: July 2012 Medicare's Payments to Physicians: The Budgetary Impact of Alternative Policies Relative to CBO's March 2012 Baseline Medicare's payment rates for physicians' services are scheduled to be reduced by 27 percent in 2013, the Congressional Budget Office (CBO) estimates, under the provisions of law known as Medicare's Sustainable Growth Rate (SGR) mechanism. The SGR mechanism consists of expenditure targets, which are established by applying a growth rate (calculated by formula) to spending for physicians' services and certain related services in a base period, and annual adjustments to the payment rates, which are designed to bring spending in line with the expenditure targets over time.' In each of the past several years, legislation has been enacted to override the SGR and to either maintain or increase those payment rates when they were otherwise scheduled to decrease. The following tables show CBO's estimates of the budgetary impact over the 2013-2022 period of various alternative policies for modifying the payment rates that are scheduled to take effect under the SGR mechanism. The options below are listed in three categories: cliff' options, clawback options, and others. (See the descriptions of those terms below; both cliff' and clawback approaches have been adopted since the Congress began overriding scheduled reductions in physician payment updates in 2003.) The estimates in the following tables are relative to CBO's March 2012 baseline, which is used for Congressional scorekeeping purposes. Both the scorekeeping baseline and the estimates of the impact of the policy options are likely to change when the final rule setting the physician fee schedule for 2013 is issued by the Administration in early November. Cliff Options: Options in Table 1 would use a cliff' mechanism to override the projected 27 percent reduction in 2013 and would specify the payment updates for that year and, in some cases, for one or two more years. The payment rate in the year immediately following the period of the override would be set as if the override had not happened. As a result, for each option in Table 1, there would be a significant reduction (that is, a cliff) in the first year after the specified update. The size of that reduction (or cliff) would vary from 22 percent to 26 percent, depending on the short-term update. Estimated Increase or Decrease (-) in Outlays 2013- 2013 Table 1: Cliff Options Billions of Dollars, by Fiscal Year 21- 2 - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 0% Update for 2013 11.1 8.5 2.6 1.1 0.0 -0.7 -1.1 -1.2 -1.0 -0.9 23.4 18.5 0% Update for 2013-2014 11.1 18.6 11.1 4.9 2.6 0.8 -0.2 -0.5 -0.4 -0.1 48.3 48.0 0% Update for 2013-2015 11.1 18.6 21.1 13.0 6.3 3.9 1.6 0.1 -0.3 0.1 70.1 75.7 MEIlUpdate for 2013 11.3 8.7 2.7 1.1 -0.2 -1.0 -1.3 -1.4 -1.2 -1.1 23.6 17.6 MEI Update for 2013-2014 11.3 19.5 11.6 4.9 2.6 0.5 -1.0 -1.5 -1.4 -1.0 50.0 45.5 MEI Update for 2013-2015 11.3 19.5 23.6 13.9 5.9 3.5 1.0 -1.4 -2.5 -2.4 74.3 72.3 Note. CBO'sMEIProjection O.6% 1.70% 2.5%o 2.2%o 2.l1% 2.O0% 2.l1% 2.O0% 2.O0% 2.l1% 1%oUpdate for 2013 11.4 8.9 2.9 1.1 -0.3 -1.2 -1.5 -1.6 -1.4 -1.3 24.0 17.0 1%oUpdate for 2013-2014 11.4 19.5 11.6 5.0 2.7 0.5 -0.9 - 1.5 - 1.4 -0.9 50.2 46.0 1%oUpdate for 2013-2015 11.4 19.5 22.8 13.6 6.0 3.7 1.1 -0.8 -1.4 -1.1 73.3 74.9 2%oUpdate for 2013 11.6 8.9 2.7 0.9 -0.5 -1.4 -1.8 -1.8 -1.7 -1.6 23.6 15.3 2%oUpdate for 2013-2014 11.6 20.4 12.0 5.0 2.7 0.2 -1.6 -2.4 -2.3 -1.9 51.7 43.7 2%oUpdate for 2013-2015 11.6 20.4 24.5 14.2 5.9 3.5 0.9 -1.6 -2.9 -3.0 76.7 73.6 Note: MEI = Medicare Economic Index. I For further discussion of the SGR, see: http://www.cbo.govipublication/41512 (Appendix).

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