AMA Comments While MedPac is Silent on SGR Repeal, Physician Payment Reform

On November 11, the AMA issued comments on the new bipartisan, bicameral proposal for the repeal of the Sustainable Growth Rate (SGR) and the reform of the physician payment system under Medicare. Since the October 30, 2013 release of the joint proposal, its authors, the House Ways and Means Committee and the Senate Finance Committee, have solicited comments on the discussion draft. The AMA, along with other medical professionals’ organizations, submitted comments before the November 12th deadline, while MedPac, which has historically played a large role in the debate surrounding the SGR, was silent on the proposal.

Bipartisan Proposal

The SGR, which ties physician fees to growth in the national economy, has been superseded in the last several years by acts of Congress,. Noting that the SGR is “fundamentally broken” and faced with a January 1, 2014 deadline, which threatens to cut physician’s payments by approximately 24.4 percent unless action is taken, the House and Senate committees produced a proposal to replace the SGR mechanism with a Value-Based Performance (VBP) payment program and encourage physician participation in alternative payment models (APM). The joint proposal specifically calls for the repeal of the SGR through a process which sets physician fee updates at zero percent through 2024 and replaces those updates with the VBP system to evaluate physician performance based on four categories: (1) quality; (2) resource use; (3) clinical practice improvement activities; and (4) electronic health record (EHR) meaningful use.

AMA Comments

While the AMA clearly supports the repeal of the SGR, the comments submitted in response to the joint proposal also suggest several substantial changes to the proposed legislative reform. Most notably, the AMA rejects the proposed zero percent updates for the next decade. According to the comments written by the AMA Executive Vice-President and CEO, Dr. James L. Madara, the AMA instead “strongly advocates for the inclusion of positive updates to reflect the increasing costs of practicing medicine, the expense of purchasing, upgrading, and maintaining electronic health records, quality reporting programs, and other regulatory requirements.” To this effect, the comments note that the transition to the reliance on a new system, partially based on APMs, will require higher investments in practice advancements and in the last decade payment updates have been “close to zero.”

The 12 pages of AMA comments call for a number of other amendments to the draft proposal, including limiting the maximum penalty under the VBP system to four percent, developing methods for determining physicians’ involvement with APMs prospectively, instituting performance comparisons for physicians in practices of similar sizes, and eliminating the suggested reduction in fee schedule payments of up to one percent for the years 2016-2018. The AMA also advocates for the creation of an assistance program for small, independent physician practices to aid those practices in meeting the standards of the VBP program and participation in the APMs.

Other Reactions

Following the lead of the AMA, the American Academy of Family Physicians (AAFP) and the American Society of Anesthesiologists (ASA) both submitted comments to the joint proposal. The AAFP’s comments, while also supportive of the general repeal of the SGR, focused on changes to the treatment of primary care in the form of a separate conversion factor for primary care that is at least 2 percent higher than that for other services. Similarly, the ASA’s recommendations back the SGR repeal while focusing on the problems unique to the anesthesiology community and, in turn, call for the addition of an inflation adjustment to the proposed freeze in Medicare payment levels to guard against further reductions to what the ASA calls “already low payments.”

The most surprising aspect in the review of the comments submitted to the joint proposal is the absence of a response from MedPac. While the AMA further emphasized the immediate need for SGR repeal in a press release following its comments urging Congress to repeal SGR by year’s end, MedPac did not officially submit comments or recommendations. How should this silence from a force typically at the forefront of the SGR controversy be interpreted? As the comments from a recent MedPac meeting imply, MedPac leaders may believe they have said enough. MedPac chair Glenn Hackberth stated in the November meeting, “The reason I prefer that approach is that there is momentum on this issue and the last thing that I want to do is anything that might disrupt the progress now underway.”