In the early 2000s a Medicare law called SGR constantly threatened physician reimbursement levels. I thought there was a big “sgr fix” but diminution of rvu is a big theme again in 2012-2025 again. Think carefully, what’s up?
ChatGPT said:
You’re remembering it right: SGR was killed, but the mechanics that actually set Part B physician prices kept pushing them down.
What the “fix” did (and didn’t). In 2015, Congress repealed the SGR via MACRA and created QPP (MIPS/APMs). MACRA set tiny, pre-programmed updates: **+0.5%/yr for 2016-2019, then 0% each year 2020-2025, and only +0.25% (MIPS) or +0.75% (APM) annually starting in 2026. No inflation indexing. So even without SGR, the baseline update has been flat while costs rose—i.e., real cuts. KFF+1
Budget-neutrality keeps whacking the conversion factor. The Physician Fee Schedule must be budget-neutral: if CMS revalues codes and the net change exceeds a $20M trigger (a number set in 1992!), the conversion factor (CF) is cut across the board. Big valuation moves—like the 2021 E/M office visit increases and the 2024 complexity add-on (G2211)—therefore forced CF reductions. (Congress partially offset them with one-year patches.) American Medical Association+2McDermott++2
Result: CF drifts down despite “SGR repeal.” Example: Congress gave a +3.75% one-time bump for 2021 and delayed G2211, just to soften a much larger cut; the CF still reset lower than 2020. In 2024, Congress again patched mid-year (+2.93% from Mar 9–Dec 31), then that patch expired for 2025, and CMS finalized a 2025 CF ≈ $32.35 (-2.83% vs 2024’s patched level). This is the fifth straight annual CF decline. American Medical Association+4AASM+4AUANews+4
Sequestration piles on. Separate from the fee schedule, the 2% Medicare sequester (paused during COVID) phased back in during 2022 and is now fully in effect, trimming payments on top of any CF cuts. (PAYGO’s extra 4% has been repeatedly deferred, but the 2% BCA sequester remains.) American Hospital Association+3Congress.gov+3American Hospital Association+3
“RVU diminution” you’re seeing = relativity shifts + CF math. RUC/CMS revaluations (work and practice expense) have shifted dollars toward E/M and other priorities; budget-neutrality then cuts the CF, spreading reductions to everyone—so many specialties experience RVU or payment pressure even when their own codes didn’t change. Add MACRA’s 0% statutory updates and the 2% sequester, and the net feels like SGR-style erosion without SGR. KFF+1
Why Congress keeps doing “patches.” Because MACRA’s 0% baseline + neutrality offsets produce visible annual cuts, Congress has applied short-term CF boosts (2021–2024) rather than structural reform, creating the now-familiar cycle of proposed cuts → temporary relief → reversion. McDermott++1
What to watch. There’s active talk of raising the $20M neutrality trigger (e.g., to ~$53M with inflation indexing) and/or tying updates to the MEI—measures that would reduce automatic CF haircuts and restore a real inflationary update. Until something like that passes, the post-SGR system still trends down in real terms. American Medical Association+1
Bottom line: The SGR crisis (huge, unpredictable cuts tied to a global spending target) is gone, but flat statutory updates + strict budget-neutrality + sequestration have recreated a steady, grinding squeeze on physician fees from 2012–2025—hence why payment erosion feels like “SGR again,” even though the culprit is now MACRA-era plumbing rather than SGR itself. KFF+1
You said:
ChatGPT said:
That’s a shrewd line of thought. What you’re pointing to is that the budget-neutral squeeze on the Part B Physician Fee Schedule is not just about annual nick-cuts: it puts long-term stress on physician participation, which can drive structural policy change that once seemed unimaginable.
Here’s how many policy watchers think about it:
1. Ratcheting Pressure on Physician FFS
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Flat or falling conversion factor plus 2 % sequestration and rising practice expenses have eroded real payment ~25-30 % since 2001.
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Physician surveys increasingly show that participation in open-access Medicare is dropping at the margin, especially in high-cost urban areas or for subspecialty and cognitive services.
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Private payers and MA plans often pay more; concierge and direct-pay models have grown in niches.
Historically Congress reacted to threatened access problems (e.g. SGR “doc-fix” patches) rather than to abstract complaints about margin squeeze.
2. Potential “Previously Unthinkable” Responses
Policy windows sometimes open when access is visibly endangered and the usual levers (tiny CF patches) no longer work. Scenarios occasionally floated by think-tank or Hill staffers include:
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Limited balance-billing: allowing a 5-15 % patient-paid surcharge above the PFS amount for FFS beneficiaries (already common in MA or private plans).
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Formalizing concierge or retainer fees: allowing physicians to charge a fixed annual “participation” or “access” fee while still billing Part B for covered services.
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Tiered participation rules: e.g. allowing “non-participating” status with capped patient surcharges to become more common, or experimenting with regional opt-outs.
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Raising the neutrality trigger or indexing CF to MEI as a less-radical but still structural shift.
3. Why This Could Happen
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Access crisis is the political trigger. If CMS and MedPAC data show increasing numbers of physicians refusing new FFS patients (or hospital-based specialists refusing Medicare call coverage), pressure for unconventional fixes rises.
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Concierge creep is already visible. If a meaningful share of primary-care and high-demand subspecialists move off-PFS FFS, Congress may prefer a controlled balance-billing regime over a chaotic out-of-network one.
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Historical precedent: Congress has repeatedly overridden statutory payment formulas (e.g., SGR “doc-fixes” 2003-2014, targeted rural bonuses, etc.) when access complaints became salient.
4. Key Counter-Pressures
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Equity / beneficiary protection: advocacy groups and AARP will resist any step that raises patient OOP liability.
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Budget scoring: balance-billing or concierge fees can increase aggregate beneficiary spending and potentially Part B spending if participation rises.
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MA growth: as > 50 % of beneficiaries are in MA, some of the physician-access problem is absorbed inside MA network negotiations rather than the Part B schedule.
Bottom Line
Your intuition—that severe payment compression can eventually breach once-firm policy taboos—is historically well-grounded.
For now, Congress has preferred temporary CF patches and is debating MEI-based updates and higher budget-neutrality thresholds.
But if those fail and access problems become visible, balance-billing or structured concierge models could indeed move from “impossible” to “negotiable.”
That is the dynamic risk to watch as the real value of the PFS continues to decline.
You said:
ChatGPT said:
You’re hitting a very real political-economy point.
1. Who Drives the Politics
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Older, higher-income beneficiaries are both politically active and swing voters.
They care more about access than about keeping every dollar of benefit untaxed. -
Historically, access crises move Congress faster than abstract solvency warnings.
Examples:
1989 balance-billing limits after public outcry about surprise bills;
1997 E/M valuation shifts when specialists complained about access threats.
2. Tipping Point Scenario
If ordinary Part B coverage cannot secure timely office visits, the political energy among the better-off will move from “keep Part B free of surcharges” to “let me pay extra to keep access.”
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A $1,000–$1,500 annual retainer is small relative to the total health spend for a 70-year-old who votes.
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Once that constituency flips, resistance from lower-income beneficiaries and AARP weakens; Congress tends to design a capped or means-tested surcharge regime.
3. Policy Levers That Could Emerge
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Limited balance-billing: for example, up to 5-10 % above the PFS amount.
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Hybrid concierge models: annual “access” fee permitted but still bill PFS for covered services.
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Tiered participation: physicians choosing a status that allows the surcharge while staying in Medicare.
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Carve-outs for low-income beneficiaries: expanded MSP/Extra Help coverage for the surcharge.
These options have all been sketched in think-tank papers or by CBO analysts at various times; none is on the Hill’s short-term calendar, but they’re no longer unthinkable.
4. Political Dynamic
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Physician exit or selective refusal of new FFS patients creates the access crisis that moves Congress.
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Well-off seniors will ally with physician lobbies; both favor flexible pricing over frozen PFS.
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The political argument will be framed as “preserving choice and access for seniors” rather than as weakening Medicare.
In short: as the real value of the fee schedule keeps eroding, the politics shift from holding the line on patient liability to preserving access for influential voters.
That’s why your forecast—that a concierge or balance-billing accommodation could appear—is plausible in the next significant access crunch.
