1. Beyond the SGR –
Family Medicine’s Asks
Kevin J. Burke
AAFP Director of Government Relations
May 14, 2012

2. Medicare Physician Payment Reform—
Beyond the SGR
Family Medicine’s Asks:
1) Repeal the Medicare Sustainable Growth Rate (SGR)
formula [w/ unused war fighting (OCO) funds as the offset]
2) Specify payment rates for a transition period (~5 yrs.) with a
higher rate (≥2%) for primary care physicians
3) Use the transition period to determine effective health
delivery alternatives

3. Ask #1: Repeal the Medicare Sustainable Growth
Rate (SGR) formula [w/ unused war fighting
(OCO) funds as the offset]
• If Congress fails to act, the SGR formula reverts to
previous payment level:
o MPFS decrease of 30.9% Jan. 1, 2013
o Budget “sequestration” cuts an additional 2%
o Annual cuts > 5-7% thereafter

4. Ask #1: Repeal the Medicare Sustainable Growth
Rate (SGR) formula [w/ unused war fighting
(OCO) funds as the offset]
• Congress has renewed the waiver of the SGR
annually (and sometimes monthly) for some 10
years.
• Investment in the practice is untenable when only
short-term funding is available.

5. Ask #1: Repeal the Medicare Sustainable Growth
Rate (SGR) formula [w/ unused war fighting
(OCO) funds as the offset]
• Problem made worse (more costly) by delay
• With withdrawal from mid-east conflicts, OCO
funds budgeted for those conflicts won’t be
available.

6. Ask #1 – Repeal the Medicare SGR formula [w/
unused war fighting (OCO) funds as the offset]
Pushback: Repeal is too costly (~$300B/10 yrs)
Response:
• It will only get more expensive
• Physicians are now paid at 2001 rates
• MedPAC reports Medicare patients are finding some
difficulty in scheduling p.c. physician
• Restraining health care costs means more primary
care – can’t get that with SGR

7. Ask #1 – Repeal the Medicare SGR formula [w/ unused war
fighting (OCO) funds as the offset]
Pushback: The OCO funds should be used to offset
pending defense cuts.
Response:
• Previously, OCO funds were in the range of $900
billion.
• This should be enough to offset SGR repeal with
funds left for other purposes.
• But OCO funds decrease as time goes on.

10. Ask #2: Specify payment rates for a transition period (~5 yrs.)
with a higher rate (≥2%) for primary care physicians.
Pushback: What replaces SGR if it is repealed?
Response:
• Gradual, predictable shift to a payment that recognizes
the value of primary care.
• Several years of statutorily defined payment rates pegged
to the current rate.
• Include higher rate for primary care physicians who are
providing primary care services.

11. Ask #2: Specify payment rates for a transition period (~5 yrs.)
with a higher rate (≥2%) for primary care physicians.
Pushback: Why pay more for primary care?
Response:
• Evidence is clear that primary care is essential to
restraining costs and improving health.
• 100% disparity in payment between p.c. and specialists
• FFS undervalues p.c. and overvalues procedures.

12. Ask #2: Specify payment rates for a transition period (~5
yrs.) with a higher rate (≥2%) for primary care
physicians.
Pushback: Didn’t ACA increase payments for primary
care – why pay more?
Response:
• Primary Care Incentive Payment: 10% for some
Medicare services only until end of 2015.
• Medicaid parity with Medicare for some p.c. services
in some states for only 2013-2014.

13. Ask #2: Specify payment rates for a transition period (~5
yrs.) with a higher rate (≥2%) for primary care
physicians.
Pushback: Didn’t ACA increase payments for primary
care – why pay more? (cont.)
Response:
• These do not offset 20 years of undervaluing of
services
• Non-public payers use Medicare payment rates.
• Commonwealth Fund study

14. Ask #3: Use the transition period to determine effective
health delivery alternatives
• The ACA created the CMS Office of Innovation to test
alternative payment models that improve health and
reduce payment.
• Advanced Payment ACO’s were created to provide up
front payments for small and medium practices.
• Comprehensive Primary Care Initiative is a multi-payor
pilot similar to the PCMH.

15. Ask #3: Use the transition period to determine effective
health delivery alternatives.
Pushback: Should feds determine what’s acceptable
model?
Response:
• CMS’s Innovation Center should validate data on
delivery models that restrain costs and improve
care.
• Otherwise, there is no effective restraint on the type
of models that would be in place.

16. Ask #3: Use the transition period to determine effective
health delivery alternatives.
Pushback: We know what works, why wait?
Response:
• Transformation of practices require investment and
training.
• Specifics of the effective models need to be sorted
out.

17. Medicare Physician Payment Reform—
Beyond the SGR
Family Medicine’s Asks:
1) Repeal the Medicare SGR formula [w/ unused war
fighting (OCO) funds as the offset]
2) Specify payment rates for a transition period (~5 yrs.)
with a higher rate (≥2%) for primary care physicians
3) Use the transition period to determine effective health
delivery alternatives

18. • Please complete the evaluation forms.
• Leave the completed forms on the table.
• Breakout sessions begin at 3:00 p.m.
– Media training
– Graham Center studies
– Comparative research
– Medicaid changes.