Congress Approves Temporary Payment Patch, President Signs Bill

Congress has passed, and President Obama has signed, a measure that extends the current Medicare physician payment rate for the next two months, thus blocking a 21.2 percent reduction that was scheduled to go into effect on Jan. 1 under the sustainable growth rate, or SGR, formula.

The two-month payment patch, which was passed as part of a massive defense appropriations bill, gives lawmakers more time to replace the SGR payment formula. With the short-term payment patch, CMS also will be able to implement a 2010 payment rule (452-page PDF; About PDFs) that eliminates Medicare payments for consultation codes and redistributes the savings to office visits and selected other evaluation and management services. This will result in higher payments for primary care physicians.

During the past eight years, the SGR has triggered steep reductions in Medicare physician payment rates, which have been averted by last minute congressional action. Not surprisingly, the looming threat of a large payment cut under the SGR creates a great deal of angst and uncertainty in the physician community every year, according to AAFP President Lori Heim, M.D., of Vass, N.C.

"You should know year to year that you are going to have a reliable funding stream," she said in a recent Connect for Reform (Members Only) video. "Any business -- any small business -- needs to have that."

In an interview with AAFP News Now, Heim said the two-month patch is a "welcome sign to give Congress the time to do a permanent fix." The scheduled 21 percent pay cut would have been "devastating for family physicians," she noted.

"Approximately 25 percent of most family physicians' income is from Medicare," said Heim. "But we know that some family physicians have an even higher percentage of Medicare patients, so you can imagine the impact of a 21 percent cut (on them)."

Heim said, however, that the two-month SGR reprieve "continues to kick the SGR can down the road without fixing the SGR." She called on Congress to provide a permanent fix as part of a larger health care reform bill.

"The problem of the SGR magnifies every year," said Heim. "Simply ignoring it does not make the problem go away."

The AAFP has taken a leading role in lobbying Congress for the elimination of the SGR. During the past several months, AAFP leaders and members have met numerous times with lawmakers on Capitol Hill, explaining the impact of the SGR and why it must be abolished.