A Proposed Five Year Overhaul for Medicare

Three of the nation's largest physician groups told Congress on Thursday that Medicare needs to overhaul the way it pays for care.  The American Medical Association, along with the American Academy of Family Physicians and the American College of Surgeons testified before the House Energy and Commerce Health subpanel about proposals to replace the Sustainable Growth Rate (SGR) formula, which if left intact, will require a 29.5% cut to Medicare payment rates beginning on January 1, 2012.

Pointing out that the current formula "cannot pay for thought, analysis, deduction, discussion and persuasion and the value that comes from managing the care of the whole person, as well as the care that comes from avoiding unnecessary care" all three presenters advocated for repeal the SGR formula this year.

Each agreed that Congress should put in place a five-year transition period during which different payment models can be tested.  A new system that transitions to a new generation of payment models designed to reward physicians and hospitals for keeping patients healthy, managing chronic conditions in a way that avoids hospitalizations and delivering high quality care with efficient use of resources was one suggestion made to Congress.

Another was to create a system of separate service category growth rates that recognizes the unique nature of the various types of services that physicians provide to their patients, while allowing for increased payments for areas experience workforce shortages.  A third suggestion was to offer primary-care physicians a 2 percent higher payment update than others during the transition period.

Committee Chairman Fred Upton has previously indicated that the committee is committed to working together with physician organizations to implement a permanent, sustainable solution this year that lessens taxpayers’ burden and ensures providers have the resources they need to provide quality care to patients.