AAFP Replies to Congressional Request for Ways to Restructure Medicare Payment System

May 31, 2013 05:30 pm News Staff

The AAFP continues to call on Congress to repeal and replace the sustainable growth rate (SGR) formula with a Medicare payment system that relies on primary care and the patient-centered medical home (PCMH) to achieve higher quality, better efficiency and lower costs.

[AAFP Advocacy]

In a May 30 letter(4 page PDF) to the Senate Finance Committee, AAFP Board Chair Glen Stream, M.D., M.B.I., of Spokane, Wash., urged Congress to adopt a payment system that would include a new category of evaluation and management (E/M) codes to reflect the intensity and complexity of primary care office visits. Stream also urged Congress to encourage the adoption of the PCMH model by paying PCMH practices a per-patient, per-month fee to support the management and coordination of patient care inside and outside of the office setting.

"When health care delivery is built on a strong foundation of primary care, efficiency and quality are high," said Stream. "However, a system that pays for health care based only on services provided fosters inefficiency through fragmentation, which can threaten quality as well."

Stream's comments are in response to a request by the Senate Finance Committee asking for input from the AAFP and other physician-led organizations on how to structure legislation that would revise the Medicare payment system. House and Senate committees are working on bills to repeal and replace the SGR, and the AAFP responded to a similar request for input from the House Energy and Commerce Committee and the Ways and Means Committee in April.

Story Highlights
  • The AAFP continues to press Congress for enactment of a more equitable payment system that better recognizes and rewards the provision of primary care services.
  • In a May 30 letter to the Senate Finance Committee, the AAFP called for a Medicare payment system that would include a new category of evaluation and management codes for primary care and a per-patient, per-month fee for patient-centered medical homes.
  • In the letter, the AAFP pointed out that a fundamental problem with how the United States pays for health care is a result of the imbalance between primary care and subspecialty care.

In the May 30 letter, Stream noted that as the Senate Finance Committee crafts legislation to replace the SGR, it is looking at three issues in particular:

  • how Congress can improve the accuracy of fee-for-service payments,
  • how Congress can construct a payment formula to reduce utilization but improve health, and
  • how Congress can provide appropriate incentives for physicians to participate in alternative payment models.

The answer to those three questions framed the AAFP's response. Although Stream acknowledged the committee's interest in finding solutions to the inherent flaws in the fee-for-service system, he encouraged the committee to go even further. "We urge the committee to consider this as an opportunity to reform the physician payment system more broadly and more effectively," said Stream.

"Real payment reform, if it is to support a primary-care-based delivery of health care, should include a per-patient, per-month payment for the management of care and a payment for quality improvement, as well as a fee-for-service payment that compensates physicians for acute-care services."

Stream also noted that although all medical care is becoming more complex, this trend is even more pronounced in primary care. "An evolving body of evidence is revealing that the complexity of the ambulatory E/M services that primary care physicians must provide during a given period of time is sufficiently distinct from existing office or other outpatient E/M codes as to merit their own codes with higher relative values," said Stream.

"The AAFP believes it is essential to correct the fee-for-service system's current undervaluation of primary care E/M services in the office or other outpatient setting, which we see as sufficiently distinct from other such E/M services in terms of complexity per unit of time, or complexity density, as to merit their own codes and higher relative values. If this needed correction to the current fee-for-service system is not accomplished, evolving alternative payment models will actuarially include this bias against primary care which exists in the fee-for-service system today."

Stream also addressed the committee's concern about reducing unnecessary utilization and urged the committee not to use the fee schedule to control utilization. "The SGR has demonstrated the fundamental flaw in thinking that reducing specific, individual payments to account for exceeding general volume targets will discourage overutilization. Instead, we encourage Congress to think about what it would want to pay for -- improved health care delivered as efficiently as possible. We would assert that the best way to achieve this goal is to foster the development of primary care practices that are PCMHs."

Attributes of the PCMH, such as coordinated and integrated care, the use of evidence-based systems, whole person orientation, and appropriate payment that recognizes the added value of the PCMH model to patients, lead to improved quality of care and greater efficiency, said Stream.

"If a patient has a personal relationship with a physician and uses the health care team of a PCMH, the result is stronger management of the patient's health care needs, which leads to less duplication, fewer unnecessary procedures, more and better communication between various health care professionals and even community services, effective management of chronic disease, more successful preventive health care, and less hospitalizations."