The Medicare Payment Advisory Commission (MedPAC) late last week issued a draft proposal that would repeal the Medicare sustainable growth rate (SGR) and pay for it by freezing or cutting physician reimbursement for the next 10 years. Under the proposal, primary care physicians would see their payments frozen at current levels for 10 years, while specialists would have their pay cut by 5.9 percent a year for the next three years, followed by a 7 year freeze. These cuts and freezes are part of a proposal to eliminate the SGR and avert the 29.5 percent physician pay cut that the formula mandates on January 1, 2011.
MedPAC, which that advises Congress on Medicare payment policy, estimates that its SGR repeal would cost about $200 billion. The cost would be offset by cuts to physicians, Medicare Part D drug plans, post-acute care facilities, hospitals, laboratories, durable medical equipment, Medicare Advantage, and others. Medicare patients would also see their benefits cut by 14 percent.
This is the first time in a decade that MedPAC is not recommending a payment increase for physicians. The California Medical Association (CMA) is extremely concerned about this sudden departure from past MedPAC policy, which demonstrates the difficult fiscal environment that we are facing as we fight to once and for all repeal the SGR. Although there seems to be the political will to repeal the fatally flawed formula, the enormous price tag to will make any proposal controversial.
CMA, AMA, and others in organized medicine strongly oppose the MedPAC proposal. A long-term payment freeze in an era of 6 percent average annual practice cost increases essentially equates to a significant payment cut. The freeze, plus the 5.9 percent cuts to specialists, will be devastating for seniors trying to find a physician in California.
MedPac is scheduled to vote on this proposal, which is expected to be fleshed out in more detail in the coming weeks, when it meets again in early October.