Medicare Physician Reimbursement

RECOMMENDATION
The AAFP supports Congressional actions to achieve the following regarding physician reimbursement in federally-funded health care programs:

Sustainable Growth Rate (SGR)
Unless Congress acts once again to override it, the SGR formula used to calculate annual updates will be reinstituted in 2008 and CBO is predicting a 9.9-percent decrease in payment rates for physicians and other Medicare providers. Moreover, because of the cumulative nature of the arcane formula, decreases in the 5 percent range are projected annually for many years into the future. Such unrelenting decreases in reimbursement, while the costs associated with operating a medical practice continue to escalate, will make it impossible for a growing number of family physicians to accept new Medicare patients. The AAFP supports the recommendation of the Medicare Payment Advisory Commission (MedPAC) to repeal the SGR formula and base the conversion factor on the Medicare Economic Index (MEI).

Care Management in a Patient-Centered Medical Home
Medicare does not compensate physicians for the considerable time and effort of assuring that the patient’s care is organized correctly and is integrated in a way that makes sense to patients, while remaining cost-effective to the Medicare program. The AAFP, the American College of Physicians, the American Osteopathic Association and the American Academy of Pediatrics describe a patient-centered medical home as the most effective way of managing health care for their patients. Such coordination and management ensures that patients stay stabilized and avoid expensive progression of their illness or costly hospitalizations. A blended model of payment combining fee-for-service reimbursement system plus a per-beneficiary, per-month stipend for care management, paid directly to each patient’s designated medical home, that has achieved recognition of an independent third party (e.g., NCQA), is a promising option that would enable family physicians to redesign their offices to deliver high quality preventive and chronic care with improved outcomes for Medicare beneficiaries.

Pay-for-Performance
MedPAC recommended in its March 2005 report that Congress should create Medicare pay-for-performance programs for physician services. The AAFP would support a Medicare pay-for-performance program for physicians that occurs within the context of positive annual updates in Medicare; rewards physicians for reporting performance measures developed by the Physician Consortium for Performance Improvement (PCPI), validated by NQF and implemented by AQA; and does not force physicians to compete for limited withholds.

Health Information Technology
Health information technology (HIT) is a public good that ultimately will benefit all Americans. While private entities are experimenting with providing HIT to patients and physicians, the federal government must do its part to ensure the health information system is readily available to all.

The AAFP supports Congressional actions that ensure privacy protections for patients and provide financial incentives to small to medium-sized primary care physician practices that have limited dollars with which to purchase electronic health record (EHR) systems. The AAFP also urges Congress to promote standards for portability and interoperability to ensure all health information technology systems can transfer health data and to foster technical assistance programs to help small practices through the process of selecting, implementing and redesigning their clinical workflow.