AAFP Denounces Congress for Failing to Repeal 'Crippling' SGR Formula

Temporary Medicare Payment Fix 'Merely Postpones the Inevitable'

February 17, 2012 05:05 pm News Staff

The AAFP has assailed Congress for failing to approve a long-term Medicare physician payment solution and opting instead to settle for another short-term payment patch. "Congress has missed an important opportunity to permanently solve the Medicare physician payment crisis, ensure health security for elderly and disabled Americans, and enable physicians to develop the long-term plans needed to redesign their practices into patient-centered medical homes" said AAFP President Glen Stream, M.D., M.B.I., of Spokane, Wash., in a prepared statement.

On Feb. 17, both the House and Senate passed H.R. 3630(www.govtrack.us), which provides a 10-month extension of the current Medicare physician payment rate. Passage of the measure, which also addressed tax relief and unemployment benefits, essentially blocks a 27.4 percent Medicare payment reduction that was scheduled to take effect on March 1 as a result of the sustainable growth rate (SGR) formula. Because H.R. 3630 postpones but does not eliminate the threat posed by the SGR, physicians will face a 32 percent Medicare payment reduction when the payment patch expires at the end of this year.

"The continued threat of deeper cuts to Medicare physician payment is the tip of the iceberg," said Stream in the statement. "Private insurers and TRICARE -- which covers members of the military and their families -- base their physician payment on the Medicare rate. When Medicare threatens to slash reimbursement, the private sector follows. That reality underlies recent survey data showing that a 25 percent Medicare pay cut would force more than one in 10 family physicians to close their doors.

"No business can remain viable when forced to work in such an uncertain and shifting revenue environment."

This latest action comes on the heels of Congress' passage of a two-month Medicare payment patch in late December, after which a House and Senate conference committee went to work to reconcile differences in House and Senate bills that would extend the Medicare payment rate and other provisions beyond the Feb. 29 cutoff. The conference committee agreed to a 10-month extension, which then was approved by Congress.

"Each temporary fix merely postpones -- and worsens -- the inevitable," said Stream, noting that the cost of repealing the SGR will climb from $316 billion today to $335 billion in 2013.

The AAFP and other health care organizations have urged Congress repeatedly to use Overseas Contingency Operations funds (i.e., monies left unspent because of the winding down of military operations in Iraq and Afghanistan) to help cover the cost of an SGR repeal, most recently in a joint statement issued Feb. 16 by the AAFP, the American Osteopathic Association, the American College of Physicians and the American College of Surgeons.

But Congress failed to capitalize on that opportunity and, instead, left in place a formula that is "crippling" the Medicare payment system, said Stream.

"End the charade. Give Americans a solution. Repeal the SGR. Replace it with a system that stabilizes Medicare with predictable, sustainable payment that builds on primary medical care and thereby improves outcomes and helps control costs."