More Medicare cuts possible in debt deal

September 10, 2011

The Medicare sustainable growth rate formula remains in place, despite efforts by numerous physicians and their associations to get it repealed during negotiations over raising the nation's debt ceiling.

The Medicare sustainable growth rate (SGR) formula remains in place, despite the efforts by numerous physicians and their associations to get it repealed during negotiations over raising the nation's debt ceiling. And the plan that was agreed on could mean even more Medicare reimbursement cuts for physicians.

The American Academy of Family Physicians (AAFP) made a final pitch just before the bill was signed into law. It called the SGR formula, which currently mandates a 30% Medicare cut for physicians in 2012 unless Congress intervenes, "deeply flawed." The AAFP warned that failure to move away from the SGR formula would force many primary care physicians to shutter their practices because they already operate on such tight margins.

"The loss of these practices goes far beyond the serious access problems for patients, particularly in rural and underserved areas that already struggle to find needed medical care," said Roland Goertz, MD, MBA, president of the AAFP.

"If our healthcare policy fails to ensure the financial viability of physician practices, preserving benefits does little good. In the end, many patients in need will go without care because there will be no one to see them," Goertz said.

In a fact sheet concerning the debt deal, the White House said: "The president stood firmly against proposals that would have placed the sole burden of deficit reduction on lower-income and middle-class families" including "proposals that would have undermined the core commitments of Medicare to our seniors and forced tens of millions of low-income Americans to go without health insurance."

Left unmentioned, however, is that patients will be affected if fewer physicians accept Medicare patients, which is likely to occur if all of the cuts are on the provider side.

Although Medicare and Medicaid are somewhat protected in a first round of $917 billion in discretionary spending reductions, that protection might not continue in a second round of funding cuts.

The "supercommittee" appointed under the deal is charged with finding at least $1.2 trillion in additional spending reductions by November 23.

If Congress does not agree to the committee's recommendations, a trigger in the law automatically will guarantee the savings through cuts in defense and other federal spending, including an up to 2% reduction in Medicare payments beginning in 2013. That trigger would not affect Medicaid funding. It is not clear whether those cuts will be on top of the SGR.