AAFP Censures Senate Regarding Medicare Payment Reduction

In a recent letter to members of the U.S. Senate, the AAFP assailed Congress for allowing a 21.2 percent Medicare payment reduction called for by the sustainable growth rate, or SGR, formula, to take effect on April 1.

"It is abundantly clear that the fee schedule formula is broken and that the time for Congress to provide a permanent fix is overdue," said AAFP Board Chair Ted Epperly, M.D., of Boise, Idaho, in the letter. "The system to address the problems caused by the flawed formula is mired in political contention. Sadly, those paying the price for this dysfunctional arrangement are first and foremost our nation's seniors and their primary care physicians. Many of these physicians work in small- and medium-sized practices, often in underserved areas, and usually with small or no operating margins."

The current 21.2 percent reduction was scheduled to take effect on Jan. 1, but Congress passed a series of short-term patches that effectively delayed the payment reductions to give lawmakers more time to find a longer-term solution to the SGR. In mid-March, the House approved a bill to provide a payment extension through April, but the Senate was unable to pass the measure before adjourning for a two-week recess on March 26.

"This month-to-month uncertainty about (physician) Medicare payments is disruptive and interferes with (physicians') ability to provide reliable, enduring health care, especially for patients with chronic disease conditions," said Epperly. "This broken system undermines the credibility of the Medicare program for these primary care doctors. And since the TRICARE health insurance program for military members and their families bases its payment rates on Medicare's, this impasse affects their health care, as well."

CMS, meanwhile, has instructed its contractors to hold payments for services delivered after April 1 for 10 business days or until April 14, which should give Congress enough time to reverse the cut before it actually affects physicians. Congress is scheduled to reconvene on April 12.

"While we appreciate the efforts of CMS to cope with the congressional stalemate by holding claims until April 14 to avoid as long as possible imposing the 21 percent reduction, this action nonetheless creates serious cash-flow problems for physician practices," Epperly said.

In addition, because of the current month-to-month approach, physicians are more or less being paid at the same level as 2001, he added.

Epperly called on Congress to "address this broken system and its dysfunctional formula," by enacting a permanent fix to the Medicare payment formula. "We join the AMA and the other physician organizations in objecting to this short-sighted treatment of the major providers of health care to the Medicare population," Epperly said.

A permanent payment fix is essential to restoring the credibility of the Medicare program and giving physicians and their patients the assurances they need to make effective health care choices, said Epperly.

"We must resolve (the payment situation) soon and resolve it permanently," he said.