Draft Proposal for Medicare Pay Focuses on Primary Care, but AAFP Challenges Approach

The Medicare Payment Advisory Commission, or MedPAC, is proposing draft recommendations that call for eliminating the sustainable growth rate, or SGR, formula, which sets payment rates for Medicare services. Although the AAFP is applauding the proposal to eliminate the SGR, which is accompanied by a positive payment differential to the Medicare conversion factor for primary care physicians, other recommendations from the commission are raising red flags.

MedPAC's draft recommendations (441-page PDF; About PDFs), which were presented during a Sept. 15 public meeting in Washington, call for repealing the SGR, a move the AAFP has been advocating for years. In addition, MedPAC is calling for HHS to establish more accurate work and practice expense values, which likely would result in shifting payments from overvalued procedural services to other services, such as those commonly used in primary care.

"Primary care has been conclusively shown to improve patients' outcomes, end fragmentation and duplication, and help rein in costs," said AAFP President Glen Stream, M.D., M.B.I. of Spokane, Wash., in a prepared statement. "By recommending that Congress repeal the sustainable growth rate formula on which Medicare payment is based and by calling for a positive payment differential to the Medicare conversion factor for primary care physicians, MedPAC clearly recognizes the immediate need to improve Medicare fee-for-service payment for primary care physicians.

"These are steps in the right direction," said Stream.

However, MedPAC has tacked a price onto repealing the SGR. The commission is recommending a Medicare payment path that would freeze current payment levels for primary care services for the next 10 years. It also recommends cutting the Medicare payment rate for subspecialists by 5.9 percent for the next three years, followed by a subspecialist payment freeze for the succeeding seven years.

This move would create a payment differential between primary care physicians and subspecialists, and it recognizes the need to preserve payment levels for primary care services, said Stream, but a 10-year freeze on Medicare payments to primary care physicians "will not protect patients' access to care, a stated goal of MedPAC. Instead, it will threaten all patients' access to care.

"After years of meager, unpredictable Medicare updates and significant inflation, many family physicians struggle to maintain their practices," said Stream. "Freezing payments for primary care for even one year will be catastrophic, severely challenging family physicians' ability to keep their practices open, much less redesign them for becoming patient-centered medical homes."

Stream also said a payment freeze sends "a negative signal to medical students whose interest in family medicine has increased in the past two years as policy discussions placed greater emphasis on the high value of primary medical care."

Consequently, the AAFP is calling on MedPAC to recommend both a positive annual update and a positive payment differential to the Medicare conversion factor for primary care physicians during the next 10 years to demonstrate the importance and value of primary care in creating a better health care system.

"We would hope that, in deliberating the SGR repeal, Congress and the Joint Select Committee on Deficit Reduction will build on MedPAC's recommendations, establish a payment plan that closes the income gap between primary care and subspecialist physicians and continue progress toward a reformed system that begins with the primary care, patient-centered medical home," Stream said.

MedPAC, meanwhile, plans to finalize recommendations on Medicare physician payment during its next meeting in early October before sending a final recommendation to Congress.