Legislation to Eliminate SGR, Boost Medicare Payments for Family Physicians Garners AAFP Support

The AAFP has thrown its support behind a bipartisan House bill that would reform the Medicare payment system by eliminating the sustainable growth rate (SGR) formula, while putting in place mechanisms to better reward primary care and the adoption of innovative payment models.

AAFP President Jeff Cain, M.D., of Denver, told a Feb. 6 congressional briefing that by eliminating the SGR, the legislation would put an end to the annual question of whether physicians can continue to practice in Medicare. It also would stabilize the Medicare payment system while encouraging the adoption of innovative payment models to improve quality and incentivize value, Cain said.

The SGR has called for deep cuts in the Medicare physician payment rate during the past decade -- reductions only averted by last-minute action by Congress. "For more than 10 years, some of the most vulnerable folks in America -- folks who are elderly, disabled and veterans have had their health care at risk because of what we know is a flawed and broken SGR system," said Cain. "Family physicians are where millions of Americans get their health care, but continued annual threats to the Medicare system really undermine the family doctor's ability to keep the doors open and to invest in their practices for new and innovative systems."

The legislation, known as the Medicare Physician Payment Innovation Act, was introduced last year by Reps. Allyson Schwartz, D-Pa., and Joseph Heck, D.O., R-Nev. The two lawmakers convened the Feb. 6 congressional briefing to announce the re-introduction of the legislation in the current Congress.

If enacted, the legislation would immediately eliminate the SGR formula, thus blocking a steep reduction in the Medicare payment rate scheduled to take effect on Jan. 1. "There is no single greater threat to the sustainability of Medicare than the flawed SGR formula -- whether it is increasing the cost of providing health care or whether we see the exodus of health care practitioners across all specialties and parameters because of the uncertainty caused by this SGR formula," said Heck during the congressional briefing.

The bill would leave in place 2013 Medicare payment levels through the end of 2014, and then would provide annual updates of 0.5 percent for all physician services for the succeeding four years and a 2.5 percent increase in payments for primary care physicians during the same time period to address the undervaluation of primary care services, according to a bill summary issued by Heck's congressional office.

The bill also calls for CMS' Center for Medicare and Medicaid Innovation to test and evaluate payment models in different geographic areas and to issue a menu of health care delivery and payment models in which physicians and other providers can choose to participate.

"It aggressively tests and evaluates new payment delivery systems, models and options, both in the private and public sectors," said Schwartz during the congressional briefing. "It rewards providers for high-quality, high-value health care while disincentivizing volume-driven care."

Meanwhile, the Congressional Budget Office (CBO) recently said the cost of repealing the SGR now stands at $138 billion, a decrease of $107 billion from the previous CBO score, according to Schwartz. "The lower CBO score bodes well for passage of the legislation," she said. "There is a much smaller hill to overcome."