AMA, Physician Groups Outline Payment Reforms to Finance Committee

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The American Medical Association and more than 100 state and specialty medical societies have outlined to Congress a set of principles needed to transition from Medicare's current physician payment system to a new one.

In an Oct. 15 letter to the Senate Finance Committee, the groups said the first step toward crafting a new Medicare payment system would be to repeal the sustainable growth rate formula. That should be followed by a series of changes, including delivery system reform, stable payment updates, and rewards for physicians who achieve savings in the delivery of care.

“The sustainable growth rate (SGR) formula is an enormous impediment to successful health care delivery and payment reforms that can improve the quality of patient care while lowering growth in costs,” the letter said. “Physicians facing the constant specter of severe cuts under the SGR cannot invest their time, energy, and resources in care re-design. The first step in moving to a higher performing Medicare program must be the elimination of the SGR formula. The status quo is bad for patients, physicians, and taxpayers,” it said.

“Many ground-breaking innovations, including many led by physicians, are already underway in Medicare and the private sector that can guide the development of a new and improved Medicare physician payment system,” the groups added. “These models include patient-centered medical homes, accountable care organizations, an array of approaches to bundled payments and shared savings arrangements as well as new initiatives designed by regional health improvement collaboratives.”

Payment Cut in 2013.

Unless Congress acts, physicians' Medicare reimbursement will be reduced 27 percent on Jan. 1. Several hearings have been held in the House and Senate in recent months on ways to reform the physician payment system, as lawmakers work to craft a permanent solution to the issue (138 HCDR, 7/19/12).


AMA and physician groups said new payment models are needed to allow doctors to lead changes in care delivery while being rewarded for improving the quality of patient care and lowering the rate of growth in costs.  



Most observers, however, expect that Congress this fall or early in 2013 will approve another in a series of short-term fixes. Physician groups have argued for nearly a decade that this approach has been harming patient access to care and creating uncertainty among providers about their Medicare reimbursement, and the Oct. 15 letter reiterated that position.

“Each year, patient access to care is eroded because the threat of steep physician payment cuts and last-minute congressional action to avoid these cuts create an environment where new Medicare patients have difficulty securing physician appointments,” it said.

“Congress must stop this vicious cycle now so that a transitional framework can be put in place that will provide some stability and predictability for seniors and physicians, along with needed delivery innovations.”

The letter said new payment models are needed to allow doctors to lead changes in care delivery while being rewarded for improving the quality of patient care and lowering the rate of growth in costs.

Investing in Physicians.

In addition to eliminating the SGR, AMA and the other groups said Medicare must invest in physician infrastructure to enable delivery and payment reforms to evolve. They also said Medicare payment updates should reflect costs of providing services, as well as efforts and progress on quality improvements and managing costs.

Any transition plan must include elements mirroring the diversity of physician practices and provide opportunities for doctors to choose payment models that work for their patients, practice, specialty, and region, the letter said.

A new system also should encourage incremental changes with financial incentives during a defined timetable, the letter said.

Financial incentives should be tied to “physicians' own actions, not the actions of others or factors beyond their influence,” the letter said, adding that physicians should have a central role in determining and measuring health care quality.

By Steve Teske  

The letter is at

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