ACP refuses to support MedPAC physician pay proposal

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"While the American College of Physicians (ACP) appreciates that Medicare Payment Advisory Commission (MedPAC) has put forward a comprehensive proposal to eliminate the sustainable growth rate (SGR) with the intent of protecting access to primary care for Medicare beneficiaries, we have very substantial concerns that preclude us from supporting it," Virginia L. Hood, MPPS, MPH, president of ACP, said in a letter in response to MedPAC’s recent proposal to fix the SGR.

"Although elimination of the SGR is an essential step toward new payment and delivery models, it is only a step–and one that should be designed carefully so as not to result in having unintended consequences,"  Hood noted in her letter. "The College is concerned that the payment freezes and cuts outlined in the MedPAC recommendations will have a significant adverse effect on beneficiary access to care, and actually impede timely and effective implementation of new physician payment models."

MedPAC’s draft recommendations to Congress last week would block a 29.5 percent pay cut scheduled for 2012 and future Medicare rate reductions, but the plan would pay for the changes by lowering rates for non-primary care services. Supporters of the proposal said it would provide more stability to future payments under the Medicare program. Opponents said the plan would split the physician community and pit primary care physicians against specialists.

Policy analysts for MedPAC explained last week that it recommends two fee schedules--one for primary care services and one for all other services. Payment rates for primary care physicians would remain flat over 10 years, while payments for non-primary care services would decline 5.9 percent a year for three years and then remain flat.

The commission is scheduled to vote on the proposal in October. If approved, the nonbinding recommendations would be delivered to lawmakers.

Since 2001, MedPAC has recommended repeal of the SGR formula used to calculate Medicare payment. Congress has not acted on the advice, and physician pay was cut by 5.4 percent in 2002. The SGR has continued to mandate reductions in Medicare rates for each year since, but Congress has used temporary overrides to keep payments flat or give modest pay increases.

Hood noted that primary care physicians would experience a net loss under MedPAC's plan, because their payment updates would not keep pace with inflation, and ancillary services and hospital visits by primary care physicians would be subject to almost a 17 percent cut over the next three years. "We anticipate that with such reductions, more primary care physicians delivering primary care will leave practice," Hood wrote.

She wrote, "ACP recommends that MedPAC consider ACP's recommendations to the Energy and Commerce Committee regarding the stabilization of the SGR, including repealing SGR and setting the annual update for primary care services at no less than 2 percent and no less than zero for other services over the next five years.

  • Like MedPAC's proposal, ACP would provide a higher update for primary care services, but it would be set at a level that would keep pace with inflation rather than freezing payments for the rest of the decade.
  • By setting the update for all other physician services at no less than zero, the severe access problems and unintended adverse consequences--such as discouraging participation in new delivery models--would be reduced.
  • During this time, new payment and delivery models aligned with value would be developed, tested and evaluated, and the most effective modes would be selected for implementation.

"Finally, ACP recognizes that MedPAC believes that physicians should contribute to deficit reduction, while helping to fund repeal of the SGR,” the letter said. “We agree that physicians must contribute to lower healthcare spending and deficit reduction, by addressing the real cost drivers. The medical profession must make a firm commitment to reduce marginal and ineffective care and to transition to new payment models aligned with value. Such an approach will address the real cost drivers in medicine and make a significant and effective contribution to lowering overall healthcare spending.”