The document outlines three asks from Family Medicine regarding Medicare physician payment reform beyond the Sustainable Growth Rate (SGR) formula. The asks are: 1) Repeal the SGR formula using unused Overseas Contingency Operations funds as an offset. 2) Specify payment rates for a 5 year transition period with higher rates (at least 2%) for primary care physicians. 3) Use the transition period to determine effective models for health delivery. The document discusses pushbacks to each ask and provides responses supporting the asks.

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.