Medicine Opposes MedPAC Medicare Fee Cut

Repealing the Medicare Sustainable Growth Rate (SGR) formula is vital, but a Medicare Payment Advisory Commission (MedPAC) plan to offset the cost of repeal goes too far, the Texas Medical Association, the American Medical Association, and the nation's state medical societies warn.

"MedPAC has had a lot of good ideas over the years, but this isn't one of them," said TMA Executive Vice President Louis J. Goodman, PhD.

MedPAC would repeal the SGR but cut payments to non-primary care physicians by 18 percent over the next three years and follow that with a seven-year freeze. It would freeze payments to primary care physicians for 10 years. MedPAC will vote on the proposal during the first week of October.

AMA President Peter W. Carmel, MD, said Congress must repeal the SGR, but doing so with the cuts MedPAC recommends "would be disastrous for Medicare patients' access to care and would derail delivery innovations that are key to improving coordination and lowering health care costs." He said the MedPAC proposal "poses a very real risk to compromise physicians' ability to retain staff, care for Medicare patients, and make the investments needed to modernize their practices and participate in new models of care delivery like accountable care organizations."

Unless Congress repeals the SGR or steps in at the last minute again, Medicare payments to physicians will drop 29.5 percent across the board on Jan. 1. 

Organized medicine made its case for SGR repeal in a Sept. 20 letter [PDF] to the Joint Select Committee on Deficit Reduction. TMA, AMA, and others reminded the committee "that the current budget baseline assumes that massive physician payment cuts will be implemented, even though Congress has rejected less severe cuts 12 times over the past decade. This SGR deficit is being kept 'off the books,' which is inconsistent with accurate budget practices. In fact, members of Congress from both sides of the aisle have stated that the current law baseline does not reflect the policies that Congress has operated by in recent years. Any effort to stabilize our nation's finances must be based on a true assessment of future expenditures."

Continued delay in replacing the SGR, the letter notes, "has escalated the cost of permanent payment reform, from $48 billion in 2005 to nearly $300 billion today. We estimate additional short-term interventions will double the cost to approximately $600 billion by 2016. With a 30-percent across-the-board payment cut in physician services scheduled for January 1, 2012, the implications of continuing this practice of simply putting off cuts to future years are clear."

"Other groups that have examined and proposed solutions to the nation's budget crisis – including the Simpson-Bowles Commission, the Senate Gang of Six, American Enterprise Institute, Heritage Foundation, and the Center for American Progress – all acknowledged that the nation cannot continue to ignore the SGR deficit. These proposals called for permanent reform of the Medicare physician payment system while at the same time significantly reducing the federal budget deficit," the letter says. "The fiscally responsible course is clear. This is the time to repeal the SGR so that new payment models can be adopted that promote high quality, cost effective care."

Action, Oct. 4, 2011