Physician groups urge Congress to use war funds to eliminate flawed Medicare SGR

February 1, 2012

Your professional groups are demanding legislators repeal Medicare’s sustainable growth rate formula. See how much it could cost, and why taking from the war chest could work.

Physicians’ groups petitioned Congress on January 23, urging lawmakers to divert military dollars to eliminate the controversial Medicare physician payment formula known as the sustainable growth rate (SGR).

The American Medical Association (AMA) and 108 state and specialty medical societies, including the American Academy of Family Physicians (AAFP) and the American College of Physicians, sent a letter to the members of the congressional conference committee tasked with addressing this issue.

The SGR formula requires payment increases to match gross domestic product growth. If expenditures exceed the target, then Medicare tries to recoup the difference by cutting physician reimbursement. The difference between targeted and actual spending on physician services accumulates, however, so that the postponed pay cuts grow larger every year. Congress has approved 13 such short-term “patches” to the SGR. The most recent patch, approved in December, expires at the end of February. If Congress doesn’t act, the payment cut will be 27.4%.

In the letter, the physicians’ groups ask Congress to use projected spending not needed for the Iraq and Afghanistan wars to help prevent any budget overruns.

“I don’t think it’s too strong to say that our demand is we need a permanent fix,” Glen Stream, MD, MBI, FAACP, president of the AAFP, tells eConsult. “We need a permanent fix so physicians know what they’re going to get.”

Members of the AAFP board of directors are traveling to Washington, DC, this week to meet with lawmakers to push the issue, says Stream, who will not make the trip.

The cost of a permanent SGR repeal has grown due to Congress’ frequent short-term patches. The repeal cost is nearly $300 billion today, up from $48 billion in 2005. If Congress continues to implement the same temporary patches, the cost will double again in 5 years, according to the AMA.

“There is bipartisan agreement that this issue has plagued Medicare and TRICARE for too long, and the cost for a permanent cure will never be less than it is right now,” said AMA President Peter W. Carmel, MD, in a statement. “Using funds that will not be needed as the wars wind down to protect healthcare for men and women in uniform and our nation’s seniors is the fiscally responsible thing to do.”

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