Congress Provides Six-Month Reprieve From Medicare Payment Cuts

Thanks in part to concerted efforts by AAFP members, Congress has passed a minimal Medicare payment increase for the next six months as part of a bill that temporarily postpones deep cuts in the Medicare physician payment rate, thus averting a Medicare payment crisis for the present.

In a last-minute deal, congressional members agreed to a 0.5 percent increase in the Medicare physician payment rate for the first six months of 2008, postponing a 10.1 percent reduction in the payment rate that was scheduled to take effect on Jan. 1 under the sustainable growth rate, or SGR, formula. President Bush is expected to sign the bill.

Nevertheless, physicians face a cut of more than 10 percent that is scheduled to go into effect on July 1 and another steep reduction in 2009 unless Congress acts, creating an unstable payment environment that threatens patient access to care. In addition, the 0.5 percent increase may not provide much help to physicians who face continuing annual increases in the cost of doing business.

"Financially, family physician practices are bleeding to death," said AAFP President Jim King, M.D., of Selmer, Tenn., in an interview with AAFP News Now. Congress is engaged in a delaying action, said King, postponing "what needs to happen, which is a complete re-evaluation of the payment system and an elimination of the SGR in order to bring some sanity to our present payment formula."

The legislation "does little to avoid the destabilizing impact that such a cut would have had on family physicians' 2008 business plans, including those for expanding patient access to care, investing in health information technology and implementing office redesign to increase efficiency," said King in a written statement from the Academy.

"At the same time family physicians are being urged to transform their practices to become patient-centered medical homes, their future Medicare payment is threatened," said King in the statement. "Now, America's family physicians will have to decide whether to continue seeing their current Medicare patients or whether to accept new Medicare patients, knowing their payment could be slashed by even more than 10 percent, come July."

King told AAFP News Now that family physicians are qualified to and want to continue to care for all of their patients, including those on Medicare, "but we are being forced into an untenable economic position" by cuts to Medicare payments, he said.

The SGR employs a formula that aligns actual spending rates with specified targets to determine Medicare payment levels. During the past six years, Medicare spending has exceeded targeted rates, triggering steep reductions in payments to physicians that have been averted only by last-minute congressional intervention.

This year, as in past years, the AAFP has zeroed in on payment cuts, mobilizing its members to contact their legislators and ultimately convincing Congress to block the impending payment reductions.

During the past year, the AAFP and its members have met frequently with House and Senate leaders, and the Academy has issued several action alerts to its members asking them to bolster the AAFP's message among federal lawmakers.

The Academy also participated with other physician organizations in two virtual rallies this fall, the last one generating more than 14,000 phone calls from physicians to Capitol Hill offices in opposition to the payment cuts. In addition, the AAFP has taken out advertisements in prominent Washington publications warning about the impact of Medicare payment cuts on physicians and patients.

During the six-month delay, the AAFP and its physician members will work on preventing the scheduled payment cuts in the latter half of 2008 and formulating strategies for replacing the SGR.

"Contact your legislators in your Congressional district and your state during the holiday break, and make sure they understand that they have to fix (the SGR) formula as soon as possible," King urged AAFP members.

In addition, AAFP will be working on other ways to mobilize members to contact legislators and the Bush administration after Congress is back in session in February.