AAFP Statement: 2012 Medicare Physician Fee Schedule Reflects Flawed SGR Formula

Wednesday, November 02, 2011

Statement attributable to:
Glen Stream, MD, MBI
American Academy of Family Physicians

“Medicare beneficiaries and the physicians who treat them will feel the brunt of the final 2012 Medicare physician fee schedule released yesterday. Since Congress has not yet addressed the physician payment cuts that are scheduled to take effect January 1, 2012, the Centers for Medicare & Medicaid Services is forced to slash Medicare payment for physician services by 27.4 percent. Such a drastic cut poses a serious threat to the financial viability of physician practices.

“Hardest hit will be primary care physicians, who are the foundation of a high quality, cost-effective health delivery system. Primary care physicians are essential to the comprehensive and coordinated care that elderly patients with multiple chronic illnesses need. In fact, Medicare patients make up an average of one-fourth of all family physician patients. For some family physicians, Medicare patients comprise as much as 80 percent of the practice’s patients.

“The Medicare conversion factor will plummet from $33.97 in 2011 to $24.67 next year. This devastating reduction will deliver a crushing blow to these practices’ financial stability. A survey by the American Academy of Family Physicians members found that nearly 13 percent would become financially unviable and at risk for closing their doors if a 25 percent Medicare pay cut took effect(1 page PDF). Of those who can keep their doors open, more than six out of 10 said they may be forced to stop accepting new Medicare patients, and more than seven in 10 said they would have to limit the number of Medicare appointments.

“In an era of financial constraint, it’s folly for Congress to continue patching the clearly expensive and unsustainable formula on which Medicare physician payment is based. With each temporary ‘fix,’ the cost of a permanent solution balloons.

“The AAFP has called on the Joint Select Committee on Deficit Reduction and the Congress as a whole to stabilize Medicare payments to physicians by repealing the flawed SGR formula and specify a payment rate for the next three to five years while demonstration programs to generate data to determine the best payment method. In order to begin closing the gaping disparity between primary care and subspecialist services, we strongly recommend that the committee stipulate at least a 3 percent higher rate for primary care physicians.

“Congress must end this annual turmoil. Congress’ failure to act further destabilizes the Medicare system on which a growing number of Americans depend. Their elderly and disabled constituents deserve better.”

Editor's Note: To arrange an interview with Dr. Stream, contact Leslie Champlin, 800-274-2237, Ext. 5224, or lchampli@aafp.org.

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Founded in 1947, the American Academy of Family Physicians represents 134,600 physicians and medical students nationwide, and it is the only medical society devoted solely to primary care.

Family physicians conduct approximately one in five of the total medical office visits in the United States per year – more than any other specialty. Family physicians provide comprehensive, evidence-based, and cost-effective care dedicated to improving the health of patients, families and communities. Family medicine’s cornerstone is an ongoing and personal patient-physician relationship where the family physician serves as the hub of each patient’s integrated care team. More Americans depend on family physicians than on any other medical specialty.

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