MedPAC plan repeals SGR, but cuts doctor pay

The AMA and others in organized medicine are speaking out against the recommendations.

By Charles Fiegl — Posted Oct. 17, 2011

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A commission advising Congress on Medicare payment issues recommended pay cuts to specialists and a 10-year freeze to primary care physicians in a package to overhaul the Medicare fee-for-service system.

The recommendations by the Medicare Payment Advisory Commission on Oct. 6 offer Congress a way to eliminate the sustainable growth rate formula used to set Medicare payments. Physician organizations, and a few MedPAC members, while supporting the elimination of SGR, were critical of the plan.

In March, the commission had recommended an increase to doctor pay by 1% instead of the scheduled 29.5% SGR cut on Jan. 1, 2012. But with Congress focused on reducing budget deficits, MedPAC came back with a separate proposal to give legislators a plan to eliminate the SGR without raising the federal deficit, commissioners said.

Fees for primary care services would remain level for 10 years under the proposal, while payments for all other services would be reduced by 5.9% for three years, followed by a freeze for the remaining seven years. Lower payments for nonprimary care services and other Medicare offsets would pay for the permanent fix.

"We are not recommending to Congress that they fully offset the costs of SGR repeal within Medicare," MedPAC Chair Glenn Hackbarth said. "We are saying that if Congress elects to do that, this is how we would approach it."

MedPAC also approved recommendations to improve the valuations of services, identify overpriced services and increase the opportunities for physicians to join shared-savings payment models, such as accountable care organizations.

The American Medical Association strongly opposed MedPAC's recommendation, which deviated from previous proposals to stop cuts that threaten patient access, said AMA President Peter W. Carmel, MD.

"The failed Medicare physician payment formula was created by Congress, and the cost of repeal has increased over time due to the budget gimmicks they used to finance frequent short-term fixes," Dr. Carmel said. "Congress must act now to permanently repeal the formula and stabilize the Medicare system for patients and physicians."

MedPAC's plan also was criticized by health care industry groups.

The commission did not fully consider the impact of options that would be used to pay for SGR repeal, said Matt Bennett, senior vice president of communications at the Pharmaceutical Research and Manufacturers of America in Washington.

One option presented by MedPAC, but not voted upon, would allow Medicare to negotiate prices for drugs.

"PhRMA believes it is important for physicians to be paid fairly," Bennett said. "However, today's MedPAC recommendations are not the appropriate way to accomplish that goal."

All but two of the 17 commissioners spoke in favor of the recommendations. Commissioner Ronald Castellanos, MD, a urologist from Cape Coral, Fla., said that the recommendations could have unintended consequences. He argued that the formula presented by MedPAC would end up allowing a primary care nurse practitioner to be paid more than if he, as a specialist, billed the same evaluation and management office visit.

He said he would not be able to keep his practice open under such a pay model.

MedPAC wandered into creating draft legislation for Congress and offered a plan that had not gone through its normal evaluation process, said Karen Borman, MD, a commissioner and general surgeon from Abington, Pa. She was concerned about how the plan could affect other payers that often peg pay rates to Medicare, such as Medicaid.

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Public opinion on Medicare pay cuts

The American Medical Association recently surveyed 1,000 adults about the 29.5% Medicare physician pay cut set for Jan. 1, 2012. They were asked how serious a problem the cut is for seniors who rely on Medicare:

Very serious 76%
Somewhat serious 18%
Not very serious 2%
Not at all serious 0%
Don't know 4%
Total 100%

Source: American Medical Association

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