Why I’m not ranting about the 21% SGR cut

It surprises me more than you.

This (the 21% SGR cut (backgrounder)) is typically just the match to get my fuse lit.  And now that I’m facing a 21% pay gut from my single biggest payor, I’m not really angry about it.

Wary of the change to my income, which will be some but not a huge amount (I hope); weary of the political machinations of a few smart, well intentioned elected representatives on both sides of the aisle and the legion of mouth breathers that fill the rest of the chamber.

It’s been SGR pong for about 10 months now, with patches, band-aids, clever financing and a lot of we’ll kick that can a bit more.  I was energized against the cuts back when they were happening several band-aids ago (and this game of congressional chicken has been going on for a decade at least), and I think I’ve finally reached an emotional exhaustion point.  Frankly, I’m glad it’s happened.  (That girlfriend who kept threatening to leave finally did, and you feel sad but actually liberated, as the BS finally stops).

I sincerely hope this cut stays in place for several more months, maybe a year.  It’ll be instructive to a lot of us, one way or another, on whether a massive and massively underfunded entitlement program can be effectively overhauled, or whether we’re doomed financially.  Greece without a bailout, unless it’s in Yuan.

I hope every provider out there who doesn’t have to take Medicare drops it. Yes, they’ll see Grandma, but bring your checkbook.  (If enough dropped their Medicare, congress would have to include a re-sign-up amnesty rather than enforce the 2 year restriction on re-signing, lest the fix have no one to practice it).  And if Medicare isn’t fixed, well, they lost nothing.

(Some medical economist out there has to know this: at what point would shedding the myriad rules (and attendant paperwork, and administration, i.e. overhead) pay for itself in just opting out, as a hospital or system?  If nothing else that would make pricing for hospital-based care very price transparent, and competitive.  I wonder how many people in the carpeted zone exist only to serve the unfunded governmental mandates?  I’d be willing to be nobody knows, as it’s such a crazy idea, and it’s an industry that’s just beaten down with so many rules, and mandates.

So, I have no real fight on this topic left.  It’s abundantly clear neither party wants to fix this, which is more than depressing.

Also, a full apology to MovinMeat over at allbleedingstops.  I took him to task in the comments to this post for being a Single Payor advocate, forgetting that he’s not been one, ever so far as I can recall.  I got that part wrong.  (The rest stands).

However, those who’ve been advocating a Single Payor system, imagine the fun of doing this kick the can routine, brinkmanship, etc, for all the health-care in the US.  Continually, like we’re doing now with a small part they cannot either fix or control, SGR.

So, see?  Not ranting.

Update: While I was writing this:

June 24, 2010 — After another week of tough political wrangling and more twists and turns than a roller coaster, a 6-month “doc fix” that rescinds a 21.3% cut in Medicare reimbursement to physicians passed the House of Representatives tonight, 417-1.

The bill, which is retroactive to June 1 and also provides a 2.2% rate increase, was passed by the Senate on June 18 and will now be sent to President Barack Obama for his signature.


  1. I’m not a medical economist by any definition, but if I had to take a stab at your question, my guess would be that opting out of Medicare wouldn’t save all that much in administrative costs. I’d guess that for most acute-care hospitals, Medicare DRG payments are worth a lot more than the personnel costs required for Medicare’s administrative burden and regulatory compliance. Staff required for Medicare admin/compliance are also needed for compliance and administrative functions imposed by other payers, other federal mandates, etc. The cost of compliance with Medicare-specific rules is probably not as large a share of the total cost of regulatory compliance as Medicare payments are to overall revenue.

    If a hospital could shed fixed costs really quickly (hard to imagine, given the nature of “fixed costs”), then I suppose it’s theoretically possible that it could drop Medicare and then downsize, emerging as a smaller institution with less capacity serving a smaller patient population. Can’t see too many hospital boards embracing that vision. Bigger is better…!

  2. Why dropping Medicare is a bad idea – http://en.wikipedia.org/wiki/Economy_of_scale.

  3. Family doc says:

    1. Dropping Medicare may not pay off for hospitals but it sure does for outpatient practices. Opted out and cash practices function well with a fraction of my traditional practices overhead because they get rid of all the crap and they don’t need to see as many patients. Low volume, low overhead practice (“ideal practices”) work best with cash.

    2. Economies of scale don’t apply that well to many areas of medicine because it is so labor intensive. In the outpatient arena, any benefit to growing past 6 docs is balanced by the hassles of the extra management layer(s) needed.


  1. […] GruntDoc – Why I’m not ranting about the 21% SGR cut […]