AAFP Calls on Budget Committee to Eliminate SGR in Deficit-reduction Plan

The formation of the new budget "supercommittee" in Washington has given the AAFP another opportunity to advocate the elimination of the sustainable growth rate, or SGR, formula -- which sets Medicare payment rates -- and the provision of at least a 3 percent higher payment rate for primary care physicians who furnish primary care services.

In an Aug. 10 letter (2-page PDF; About PDFs) to the newly appointed Joint Select Committee on Deficit Reduction, AAFP Board Chair Lori Heim, M.D., of Vass, N.C., calls for a repeal of the SGR and a specified payment rate for the next three to five years to give various demonstration programs and alternative health care delivery models enough time to generate sufficient data to determine which payment methods make the most sense from both a fiscal and a quality perspective.

The bipartisan committee has been tasked by Congress with developing a plan to achieve federal budget cuts and possible revenue increases. If the government fails to enact the committee's recommendations by Dec. 23, across-the-board cuts totaling $1.2 trillion in will be automatically triggered.

In the letter, Heim reminds committee members about the role primary care plays in restraining health care costs and improving quality. For example, she notes, there is growing evidence that the patient-centered medical home and accountable care organization, or ACO, models "can reduce total (medical) costs by 7-10 percent, largely by reducing avoidable hospitalizations and emergency room visits."

In addition, notes Heim, "No matter how health care delivery is transformed, we will need additional primary care physicians." That means it is imperative the committee not include cuts in graduate medical education payments for primary care education and training, she added.

Heim also points out that primary care is just 6 percent to 7 percent of total Medicare spending. Primary care-based experiments in payment are recouping the entire cost of care and not just added investments, says Heim. "These findings hold true in integrated systems like Geisinger; insurance experiments like Blue Cross Blue Shield of South Carolina (and) Community Care of North Carolina …; (and) individual system efforts like Johns Hopkins," says Heim.

"The key factor across all of these (systems) is increased investments in the primary care setting. Based on the early results of these experiments, we believe that increasing primary care payments so that they represent 10-12 percent of total health care spending to improve access to a broader array of services will more than offset the cost of the investment."

In fact, notes Heim, an evaluation of a primary care ACO by the AAFP's Robert Graham Center shows that, in the long term, investments in new payment models could offset inpatient costs by 50 percent or more.

Heim also calls for rebalancing the nation's health care delivery system. "The United States has built a health care system that focuses on acute care at the expense of preventive care, coordination of care and chronic disease management," says Heim. "This imbalance means that we rely on the fee-for-service (model), which rewards volume and disregards care management and cognitive medical skills provided by primary care physicians."