Letter to Senate Finance Committee on Medicare Physician Payment Issues

The Honorable Charles E. Grassley
Chairman, Finance Committee
135 Hart Office Building
U. S. Senate
Washington, DC 20510

Dear Senator Grassley:

On behalf of the 94,000 members of the American Academy of Family Physicians, I appreciate your efforts and those of the members of the Finance Committee who are working on the budget reconciliation measure to include a provision to specify an increase in the Medicare payment to physicians. This increase of 1 percent for 2006, instead of a 4.4-percent decrease that is projected to take place under the current flawed formula, is welcome.

However, we are disappointed that the Committee did not take this opportunity to address the underlying problem of the formula that includes a conversion factor based on the so-called Sustainable Growth Rate that generates steep reductions in physician payments for the foreseeable future, unless Congress intervenes. And while the growth in payment is modest, the reporting requirements that the Committee’s draft would impose on physicians are significant and costly. Physicians cannot meet the increasing performance reporting requirements while the payment for their services does not provide the financing to do so.

In addition, the Committee’s proposal creates a system in which physician practices are penalized up to 2 percent of their payment if they do not report performance measures that they cannot afford to undertake. Such a system does not lead to improved quality but rather to physicians who increasingly cannot make ends meet. This is particularly the case in small practices of one to three members that are prevalent in rural and underserved communities.

We look forward to working with you and the members of the Committee is fashioning a permanent solution to the skewed Medicare physician payment formula. And we believe that the physician community can help the committee find a more effective way to initiate a value-based purchasing system for Medicare. Our nation’s seniors deserve a health care system that delivers the best quality of care. We hope that the Finance Committee can find a payment formula that supports that system. We would be pleased to help in that effort.

Sincerely,


Mary E. Frank, MD, FAAFP
Board Chair