AAFP Responds Quickly, Forcefully to Draft Proposal on SGR, Medicare Payment

April 17, 2013 03:45 pm News Staff

The AAFP has taken a leading role in framing the debate regarding Medicare payment reform by responding quickly and forcefully to a House draft proposal that would eliminate the sustainable growth rate (SGR) formula, while making fundamental changes to the Medicare payment system.

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The draft proposal, put forth by the House Ways and Means and Energy and Commerce committees, is made up of three elements that essentially would repeal the SGR and take steps to move from a volume-based to a value-based Medicare payment system. It would be based on performance measures to improve patient care.

In a letter(406 KB PDF) to the chairs of the two House committees, AAFP Board Chair Glen Stream, M.D., M.B.I., of Spokane, Wash., took issue with the use of performance measures as a sole means of improving care, saying "It is our experience that performance measures can be used to improve targeted areas of health care delivery, but quality improvement is more complicated and more individual than can be reflected in performance measures alone.

story highlights

  • The AAFP has responded to a House draft proposal that would eliminate the sustainable growth rate (SGR) formula and reform Medicare payment.
  • In a letter to House committee chairs, the AAFP provides a critique of the draft proposal while reiterating its positions on Medicare payment reform and the elimination of the SGR.
  • As part of its recommendations, the AAFP has called for other improvements to the health care system, including medical liability reform and workforce reform.

"Therefore, while we agree that pay-for-performance should be included in payment reform, we understand that it alone is not sufficient to lead to general improvement in quality. Payment reform needs to include revisions to fee-for-service, especially higher payment rates for primary care and payment for the coordination of care."

Quality improvement depends on other factors, as well, said Stream, such as investments in regional health care infrastructures, tighter requirements for the interoperability of health care technology, promotion of greater interprofessional education and community-based training, and near real-time feedback on quality measures.

The committees' proposal also calls for a fee-for-service payment system that moves toward efficiency measures to achieve savings for the health care system. In response, Stream said most efficiency measures achieve short-term savings for the health care system at large, but individual practices do not capture the cost savings in most instances.

"Efficiency measures without gain-sharing across the health care system are likely to be ineffective," said Stream. "The AAFP believes that the evidence is clear that the way to achieve savings is to firmly base health care delivery on primary care."

The committees' latest proposal marks the second iteration of a framework for reforming the Medicare payment system and the second time the AAFP has issued a response to the measure. In its latest response, the AAFP has commented on specific parts of the proposal before responding to 12 specific questions posed by House committee staff members who are planning to turn the drafts into legislative proposals.

For example, the proposal calls for repeal of the SGR and a period of predictable, statutorily defined payment rates. In response, the AAFP says a "period of stable and predictable rate increases is absolutely necessary."

"Moreover, these positive rate increases must contain a higher payment rate for primary care services offered by primary care physicians. In addition, the length of time for the period of stability must be identified."

The AAFP recommends five years of payment stability to give physician practices sufficient time to evaluate and adopt the new payment and care models.

The AAFP also reiterated many of its longstanding positions on Medicare payment reform. In response to a House committee question on rewarding improvement in quality during a period of time in addition to quality level compared with that of peers, Stream said the "AAFP believes it is not only appropriate to reward improvement in quality over time, but this is probably a stronger and more effective metric than quality compared to peers."

The AAFP again called for a blended payment model in response to a question about what will be required to support physician participation in new payment models. A blended payment model entails a fee-for-service base, as well as a risk-adjusted, per-member, per-month management fee and an incentive for achieving quality benchmarks, said Stream.

Stream also recommended a permanent increase for primary care services by creating separate primary care evaluation and management codes with higher values to reflect the complexity and intensity of services provided by primary care physicians. And, he called for professional liability reform that holds physicians harmless when they adhere to a standard of care and reform of workforce training methods to ensure that more primary care residents are trained in nonhospital settings.


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