AMA urges debt commission to reform SGR

Physicians hope Medicare payment is one area a federal fiscal panel will consider before making final budget recommendations by Dec. 1.

By Chris Silva — Posted Sept. 20, 2010

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The American Medical Association wants the bipartisan debt commission created by President Obama to consider sending Congress a proposal to repeal the sustainable growth rate formula before lawmakers recess in early October to head home for the November midterm elections.

The National Commission on Fiscal Responsibility and Reform is set to meet Sept. 29, and the AMA is strongly urging commission members to consider a proposal to permanently reform the SGR, which helps determine Medicare payments to physicians.

In June, Congress approved a 2.2% increase to avert a 21% pay cut for physicians.

But unless lawmakers intervene again, physician rates are scheduled to decline 23% on Dec. 1, an additional 6.5% in January 2011 and 2.9% more in 2012.

The debt commission was created through an executive order the president issued on Feb. 18.

The panel is charged with identifying policies to improve the nation's fiscal situation in the short term and achieve sustainability in the long term.

The commission is slated to vote on a final report containing a set of recommendations no later than Dec. 1.

The AMA is arguing to commission members that the most fiscally responsible action is immediately to repeal the SGR formula, which the Centers for Medicare & Medicaid Services adopted as called for under the Balanced Budget Act of 1997.

"The broken Medicare payment system is threatening access to health care for seniors now and in the future," said AMA President Cecil B. Wilson, MD. "It will cause physicians to face an almost 30% cut in Medicare payments near the end of this year unless Congress intervenes."

The AMA and other physician groups want Congress to scrap the SGR permanently and replace it with a pay system that more directly tracks the Medicare Economic Index.

The MEI is an annual measurement of medical inflation, or the increased costs to physician practices of providing care. Along with other factors, it helps determine physician base pay rates for a given year under the SGR.

In 2005, physicians faced a scheduled Medicare cut of 3.3%, and the Congressional Budget Office estimated then that the cost of a 10-year payment freeze would have been $48.6 billion. The most recent estimate by the CBO now places that cost at $276 billion over 10 years.

So the longer Congress waits to address the SGR long-term, the higher the cost for a permanent fix grows.

"We urge members of the commission to make real reform of the broken Medicare physician payment formula part of their plan to stabilize the federal budget and secure Medicare for future generations," Dr. Wilson said.

Medicare targeted

Medicare and Medicaid spending will account for the largest single portion of the federal budget between fiscal years 2010 and 2020, the CBO projects. Although this will contribute to a doubling of the national debt, the Obama administration wants to reduce annual budget deficits to a more manageable 3% of the gross domestic product.

Obama indicated at the debt panel's first meeting April 27 that all federal programs, including Medicare and Medicaid, will be considered as it proposes ways to address fiscal challenges and to balance the budget.

"Each year, more tax dollars are devoted to Medicare and to Medicaid," he said.

The administration inherited an annual budget deficit of $1.3 trillion, and additional projected deficits total $8 trillion during the next 10 years.

The Medicare trustees report released Aug. 5 found that annual spending growth for Part B is estimated to average 5.3% during the next five years, about the same as the gross domestic product growth rate. But this assumes that deep physician pay cuts will take effect. However, those cuts are not likely to happen, because Congress is expected to intervene.

"The projected future growth rate reflects unrealistic reductions in physician payments required by the current law," the trustees wrote. "Legislative changes to the current statute regarding physician payments are nearly certain and could increase the projected Part B growth rates to about 8% through 2014."

Healthcare Now!, a Philadelphia-based grassroots organization, is concerned that the debt commission will make cuts to Medicare that will impact seniors negatively.

The group hopes the panel will give consideration to recommending adoption of a national, single-payer health care system.

"Implementing a single-payer, improved Medicare-for-all system would be a long-term deficit reduction plan that deserves attention from anybody giving serious consideration to the nation's economic woes," said Donna Smith, legislative advocate for National Nurses United, which joined Healthcare Now! in a Sept. 8 news release that criticized some statements it said the debt commission has made about cutting Medicare and Social Security.

"Given that the commission now sitting has been unwilling to put all deficit reduction solutions on the table, they have not met the charge given them by the president."

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