President's Message

Repeal of SGR Would Allow Academy to Move Forward on Other Issues

November 13, 2013 09:50 am Reid Blackwelder, M.D.

For more than a decade, the AAFP has been calling for the repeal of the flawed sustainable growth rate (SGR) formula that CMS uses to calculate physician payments for providing services to Medicare patients. Instead, Congress has repeatedly put short-term patches on the problem -- at a cost of billions of dollars -- rather than producing a long-term solution.

Reid Blackwelder, M.D.

At last, it looks like a long-term solution may be within reach.

Last week, we told you that the House Ways and Means and Senate Finance committees had released a bipartisan, bicameral proposal that would repeal the SGR and replace it with alternative payment models more closely aligned with quality of care.

We also asked for your opinion on the proposal, and we received responses from both individual AAFP members and our state chapters. The input was mixed, with some respondents voicing concerns about the proposal and others supporting it as a bold move forward.

After very careful deliberation, the Academy has offered its support for the proposal along with recommendations for improving it(7 page PDF). Although we think the proposal is imperfect, it does address many critical and longstanding areas of concern for family medicine. The proposal

  • repeals the SGR;
  • rewards participation in alternative payment models such as the patient centered medical home and provides financial incentives for physicians who transform their practices;
  • provides financial resources to assist small practices with practice transformation;
  • directs the Government Accountability Office to study the AMA/Specialty Society Relative Value Scale Update Committee (RUC) processes for making recommendations on valuation of physician services;
  • establishes care-coordination codes in the Medicare physician fee schedule; and
  • consolidates three existing quality and process improvement programs into a single program.

It's important to note that this proposal isn't even a bill at this point. It's a "discussion draft,(" which means the finished product could vary greatly -- for better or worse -- compared to what the committees have released. Thus, we will continue to advocate for a better proposal that is more advantageous for family physicians and their patients, and we will work hard to inform Congress about the provisions that need to be improved or changed.

For example, the AAFP, in its Nov. 12 letter to congressional leaders, reasoned that the 10-year freeze on Medicare physician payments called for in the proposal would present a significant challenge to family physicians, particularly those in small and individual physician practices. Therefore, we recommended that Congress create higher baseline payments for primary care that are at least 2 percent higher than those used for other services. We reminded legislators that the Medicare Payment Advisory Commission has continuously called for a similar measure to address the primary care payment gap.

We also recommended that Congress extend existing programs that provide enhanced payments to primary care physicians, such as the enhanced Medicaid payment for primary care and the Medicare Primary Care Incentive Payment programs, beyond their respective expiration dates of Dec. 31, 2014, and Dec. 31, 2015.

The proposal also calls on HHS to provide technical assistance to small practices in health professional shortage and rural areas to help them improve performance and to facilitate participation in alternate payment models. Although the gesture is well intended, the Academy pointed out in its letter that the amount suggested in the committees' draft -- $50 million during a five-year period -- would be insufficient for the number of practices that would need, and qualify for, such assistance. In fact, we requested that Congress provide $500 million and that all small practices be eligible, regardless of geographic location.

Although we could dissect the proposal here line by line, the point is that there still is work needed as this proposal moves forward. To that end, Academy leaders will be in Washington next week to meet with legislators and congressional staff. The SGR once again will be the top item on our agendas.

It's also important to remember that health care is constantly changing, and this proposal outlines some of those changes. We also must not overlook the significant reforms this proposal represents, reforms that will move health care away from the strictly fee-for-service system, which is so detrimental to primary care, and toward more quality-oriented payment systems. With this proposal, Congress is signaling that the time to move from strictly fee-for-service is now, and we will need to respond.

We certainly hope that our days of talking about the flawed SGR formula are almost over. If Congress follows through and repeals the SGR, we then could move our focus to other pressing issues, including ensuring an adequate family medicine workforce for the future. Stay tuned, as we expect significant changes in the final legislation. We will be there throughout the process, representing you.