AARP Exhorts Congress to Eliminate SGR

AARP sent a letter to Congressional leaders urging them to take long-term action to protect Medicare patients’ access to health care providers. The letter specifically encouraged lawmakers to repeal the Sustainable Growth Rate (SGR), which determines the rate at which CMS pays Medicare providers under the physician fee schedule, and to develop a new method for determining physician payment.  AARP and five other signatories, including the American College of Physicians, insisted that such action is necessary to ensure that Medicare beneficiaries can maintain relationships with trusted physicians.

The Balanced Budget Act of 1997 (P.L. 105-133) authorized the use of the SGR to determine the rate at which Medicare would pay physicians for their services. Rather than simply adjusting the payment rate based on inflation, the SGR was supposed to balance increases in health care costs with other economic factors; however, health care costs began to increase at higher than expected rates. If implemented annually, the SGR formula would have dramatically decreased Medicare payments to physicians—which may have led physicians to stop accepting Medicare patients. Congress recognized this problem, which is why, according to the AARP letter, it has voted to postpone the annual SGR increase for the last ten years.

According to AARP, the annual postponements increase uncertainty in the Medicare system. As a result of past postponements, should cuts go into effect on January 1, 2013, physicians would see a drastic 27% cut in payments, which would likely cause them to stop accepting Medicare patients. Beneficiaries live with the anxiety that they may need to sever long-term relationships with practitioners at the end of each year.

AARP proposed that Congress repeal the SGR altogether to work on an effective, long-term solution to the physician fee payment problem. In the interim, the organization advocates utilizing money from the Overseas Contingency Operations (OCO) fund, a discretionary fund used to fund military operations in Afghanistan, Iraq, and elsewhere. According to the American Medical Association (AMA), allocations are made to the fund for a ten-year period; because military operations are winding down, however, the Pentagon does not expect to utilize those funds. AARP was adamant that the burden of the physician payment problem cannot be placed on the elderly, who typically receive an annual income of less than $22,000, 15 percent of which is spent on health care. The organization emphasized its willingness to work with Congress to develop a sustainable solution.

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  1. […] The automatic 2 percent reduction is the result of the  Budget Control Act of 2011 (P.L. 112-25); the cut in physician payments is a continuation of Congress’ yearly attempts to deal with a physician payment (for a recent story on this, see AARP Exhorts Congress to Eliminate SGR). […]