The SGR---Again and Again and Again and Again…

by David M. Gimlett, M.D.

Announcement.  The Senate Finance and House Ways and Means committees are working on a new SGR (Sustainable Growth Rate) repeal proposal. The two congressional committees, working in a bipartisan fashion, reacted to physician concerns regarding a proposal from October to repeal the SGR and create a more streamlined pay-for-performance (P4P) or Value Based  system.

Apparently the committees are readying to vote this week on a 3 month patch for the non-functional sustainable growth rate (SGR) payment formula for physicians.(1) The non-functioning of this formula for the last ten years mirrors the accomplishments of our political leaders. Time marches on and the primary care base of our medical system continues to erode as the waves of entrenched interests wash away the sands of responsible, personal medical care.

If the Congress wants a quick fix they should just repeal the SGR and establish a 25% increase in the primary care evaluation and management conversion codes and a budget neutral decrease in the conversion factor for the procedure codes.  Instead they are fooling around with the Physician Quality Reporting System, "meaningful use" program, and Medicare Value Index Modifier.  All of these are based on unproven (or disproven) pay-for-performance theories.(2,3)

As Berenson and Kaye argue, CMS and other venues can not accurately measure physician’s performance and they will not be able to do so “in the foreseeable future”. (4) They offer no real cost control and they add another layer of bureaucratic guidelines, forms, and reporting requirements. And they create new fields for gaming the system. Ryan and Werner point out that, ”There is little evidence, however, that these programs (pay-for-performance)  improve patient outcomes, suggesting that to the extent that health care providers have responded to pay-for-performance programs, that response has been narrowly focused on improving the measures for which they are rewarded —such as making sure patients receive recommended blood tests if they have diabetes or the right cocktail of medications if they are hospitalized with a heart attack.”(5) Even such an easily measured parameter as hypertension was not benefited by a large (470,725 patients) pay for performance study in the UK. There was no change attributable to pay for performance in blood pressure, or incidence of stroke, myocardial infarction, renal failure, heart failure, or all cause mortality.(6)

It is no wonder that Medicare’s huge, P4P two hundred hospital “Premier Hospital Quality Incentive Demonstration” showed a return to baseline at the end of 5 years, with no improvement.(7)  The well-respected, evidence based Cochrane Collaboration, after an extensive review of the literature, found that “there is insufficient evidence to support or not support the use of financial incentives to improve the quality of primary health care. Implementation should proceed with caution and incentive schemes should be carefully designed and evaluated.”(8)

In addition to these caveats there is a large volume of pertinent literature that explores the differences between intrinsic and extrinsic motivation.  Intrinsic motivation involves engaging in an activity because it is personally rewarding (you would do it even if nobody was watching). An example of the extrinsic, of course, would be pay-for-performance. Medicine has always been a profession guided by this intrinsic force. In 1999 Deci et al(9) published a meta-analysis of 128 studies on the effects of intrinsic vs. extrinsic rewards. Their findings lend an understanding of one of the major problems with P4P plans.  Basically they found that tangible rewards — particularly monetary ones — undermine motivation for tasks that are intrinsically interesting or rewarding, an effect that is quite large. This is called “crowding out.” To quote their article:

“Symbolic rewards (e.g. praise or flowers) do not crowd out intrinsic motivation, and may augment it. 

The negative effects of monetary rewards are strongest for complex cognitive tasks. 

Crowding-out effects tend to reduce reciprocity and augment selfish behaviors. 

Crowding-out may spread (both to other tasks and to co-workers), decreasing intrinsic motivation for work not directly 

incentivized by the monetary rewards. 

Crowding-out is strongest when external rewards are large; perceived as controlling; contingent on very specific task performance; or associated with surveillance, deadlines or threats.”

The perfect parable of pay-for-performance is that of the member of the House Ways and Means Committee who was invited out to a nice dinner party. At the end of the evening he complimented the hostess on the food, the wine, the presentation, and the company.  He then pulled out a $20 bill and handed it to the hostess, saying, “this is for your performance.” I don’t believe he was invited back.

Ironically, the president of the American Academy of Family Physicians is quoted as praising some of these proposals by saying, "By encouraging physicians to build on the patient-centered medical home model and other alternative payment models, the proposal shifts focus away from delivery and payment models that foster episodic care, instead, it moves toward those that facilitate ongoing comprehensive care that reduces intensive medical and inpatient services."  Doesn’t anybody worry about the fact that all these theories and  all of this political finagling just contribute to the demise of primary care medicine. The medical students and medical residents of today are staying away from primary care by the droves for good reason, and it is getting worse. There is no use to talking about increasing the number of graduates or the number of primary care residencies unless reimbursement problems are addressed.  The income disparities have to be fixed.

It’s amazing how so many politicians, bureaucrats and rule makers latch on to the latest fad terms and concepts. The literature and studies are extensive. We all need to get back to one of the original medical maxims “primum non nocere”, first of all, do no harm.

A prescription for our Congressmen:  Cut through all this political posturing. Perform the emergency surgery, cut the conversion factor into two unequal pieces in order to save the heart and life of basic, primary medical care; then start looking at the long-term, evidence-based changes needed in our unsustainable health care system.(10)

Suggested Reading:

1) Primary Care Quick Fix -

2) Health Policy Brief: Pay-for-Performance -

3) Pay for performance fails to improve mortality rates  -

4) Grading a Physician's Value - The Misapplication of Performance Measurement. -

5) Doubts About Pay-For-Performance in Health Care  - HBR Blog Network, Andrew M. Ryan and Rachel M. Werner, Harvard Business Review, October 9, 2013 -

6) Effect of Pay for Performance on the Management and Outcomes of Hypertension -

7) The Effect of Pay for Performance in Hospitals -

8) The effect of financial incentives on the quality of health care provided by primary care physicians -

9) Extrinsic Rewards or Intrinsic Motivation -

10) PNHP Research: The Case for a National Health Program -

TAGS: repeal Medicare's payment formula, SGR, Healthcare Disconnects, healthcare reform, Medicare, Cochrane Collaboration, Senate Finance and House Ways and Means committee, pay-for-performance,intrinsic vs. extrinsic rewards, Physician Quality Reporting System

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