Medicare advisory group recommends SGR repeal, catch-up for PCPs

October 12, 2011

The Medicare Payment Advisory Commission will officially recommend to Congress a plan that repeals the sustainable growth rate formula and replaces it with a mechanism to keep rates steady for primary care physicians over the next decade while cutting payments to specialists. Not surprisingly, the AMA and specialty societies strongly oppose the plan. Find out why the AAFP also has concerns.

The Medicare Payment Advisory Commission (MedPAC) has voted 15-2 to recommend to Congress a plan that repeals the sustainable growth rate (SGR) formula and replaces it with a mechanism to keep rates steady for primary care physicians (PCPs) over the next decade while cutting payments to specialists.

“The [SGR] system-the current formulaic system for updating fee-schedule payments-is fundamentally flawed,” MedPAC staff wrote in a brief for the committee. “Although eliminating it carries a high budgetary cost, leaving it in place is considered by many to be even more problematic.”

Currently, the SGR formula, which is strongly opposed by primary care groups, calls for a 29.5% cut in physician payments starting January 1. Although Congress has repeatedly passed stop-gap legislation to prevent the cuts, it hasn’t developed any other system.

The vote for MedPAC’s plan, to cut payments for specialist services by 5.9% for 3 consecutive years before freezing them, brought strong condemnation from the American Medical Association (AMA) and specialty groups such as the American Academy of Ophthalmology.

“The recommendation voted on today by MedPAC flies in the face of their previous recommendations to stop harmful physician cuts that threaten access to care for patients,” said AMA President Peter W. Carmel, MD.

Earlier, the AMA joined with many specialty societies in a letter asking the committee to vote down the proposal.

The American Hospital Association also argued against aspects of the proposal, saying that “offsetting the cost of the repeal with Medicare cuts to hospitals and other providers is merely ‘robbing Peter to pay Paul’ and is the wrong approach.”

While the American Academy of Family Physicians (AAFP) applauded efforts to
equalize payments to PCPs when the proposal was released in late September, it also expressed some concerns.

“After years of meager, unpredictable Medicare updates and significant inflation, many family physicians struggle to maintain their practices,” AAFP President Glen Stream, MD, MBI, said in a statement. “Freezing payments for primary care for even 1 year will be catastrophic, severely challenging family physicians’ ability to keep their practices open, much less redesign them for becoming Patient-Centered Medical Homes.”

AAFP called on the committee to recommend instead a positive annual update and a positive payment differential to the Medicare conversion factor for PCPs over the next decade.

If Congress follows the MedPAC recommendation, the cost will be steep. The group’s recently released proposal said that repeal of SGR would cost $200 billion and be paid for by cost-sharing among providers, beneficiaries, laboratories, durable equipment manufacturers, pharmaceutical companies, and others. The Congressional Budget Office’s estimates the cost of repealing the SGR formula to be $300 billion.

The recent MedPAC proposal noted the disparity between payments to PCPs and specialists under the current formula and the effects of that discrepancy. It also pointed out that access to primary care poses a challenge: 12% of Medicare patients and 19% of privately insured patients report that finding a new PCP is a “big problem,” whereas only 5% of those with Medicare and 6% of those with commercial insurance have trouble getting an appointment with a new specialist.

Go back to the current issue of eConsult.