AAFP, Other Physician Organizations Call for SGR Replacement This Year

The AAFP has joined the AMA and other physician-led organizations in asking Congress and the Obama administration to replace the sustainable growth rate, or SGR, formula this year with an updated payment system that reflects increases in physicians' and other health professionals' practice costs.

"A realistic budget baseline for future Medicare payment updates, which accurately reflects the anticipated costs of providing physicians with positive updates under a new update system in lieu of SGR-related cuts, should be incorporated into the federal budget," says joint recommendations document (6-page PDF; About PDFs) drafted by the AMA and endorsed by the AAFP and nearly 60 other physician-led groups.

The SGR employs a formula that aligns actual Medicare spending rates with specified targets to determine payment levels. During the past several years, Medicare spending has exceeded targeted rates, triggering reductions in payments to physicians that have been averted only by last-minute congressional intervention. In the five-page document, the physician groups say that if Congress and the Obama administration adopt a transitional approach to replacing the SGR, that approach should ensure that the SGR replacement is completed by 2015.

The document also calls on the government to provide positive, funded payment updates that are linked to the Medicare economic index, or MEI, from 2010-15, when the SGR replacement would take effect. And it calls for adjustments in the MEI to include all the costs of a current medical practice and the use of realistic productivity assumptions.

In addition, the document asks the administration to use its regulatory authority to remove physician-administered medications from the SGR calculations, retroactive to 1996, to help reduce the cost of a repeal of the SGR.

The document also addresses the nation's primary care workforce, calling for workforce improvements that would be paid for by system-wide savings stemming from more appropriate utilization of various Medicare services.

"Payment increases for primary care services should be considered a change in law that would not require a budget-neutrality offset in the Medicare physician payment schedule," says the document.

Furthermore, the document urges "loan forgiveness and other debt relief strategies to encourage practice in specialties and geographic areas with critical shortages."

Not surprisingly, the document endorses payment system reforms that support the provision of high-quality, cost-effective care. It says, for example, that innovative financing and delivery systems such as shared savings, bundled payments and accountable care organizations should be further developed.

"Multiple models of these concepts should be pilot-tested and evaluated in a variety of practice settings (including large and small practices), geographic locales (including urban and rural), and among different specialties and patient populations," says the document. "Demonstrations must ensure that physicians have an appropriate level of decision-making authority over bonus and shared-savings distribution."

The findings from these demonstrations should be collected and widely disseminated to facilitate midcourse corrections, determine when expansions are warranted and guide new projects, according to the document.

"An ongoing process should be created to provide for rigorous evaluation, with input from physicians and other stakeholders, of which innovations are ready for wider implementation; which require more evaluation, refinement and testing; and which have been found not to be effective," says the document.

The document opposes a "one-size-fits-all" approach, arguing that physicians should have the flexibility to adopt different approaches based on their practices' composition and capabilities.

In their document, the organizations call for a re-examination and refinement of the Medicare Physician Quality Reporting Initiative, or PQRI. The focus of the PQRI, they say, should move from conditioning positive updates for physicians and other health professionals on "reporting for the sake of reporting" to rewarding demonstrated quality improvements in patient care.

The federal government should support CMS as the agency "works with the medical community to refine the program and remove obstacles that have hindered physician participation in the program," says the document.

Congress, meanwhile, should promote appropriate and effective care by supporting initiatives that are designed to bridge gaps in care, assure the appropriateness of services provided to Medicare beneficiaries and reduce inappropriate variation in health care utilization. This support could entail an investment in clinical comparative effectiveness research, the document says.

Finally, the document seeks to promote healthy lifestyles and appropriate use of medical services by encouraging Americans to take an active role in their health care. It calls for public programs designed to reduce smoking, obesity, and alcohol and drug abuse and to encourage immunizations and healthy lifestyle choices.

"Medicare preventive care coverage should be expanded to include additional services such as wellness exams and counseling to facilitate joint physician-patient decision-making to help reduce the incidence and progression of chronic disease," the document says.