ACP: Governmental Affairs and Public Policy - ACP Urges CMS to Make Administrative Changes to the Sustainable Growth Rate (SGR) Formula for Updating the Medicare Physician Fee Schedule

Advocacy

ACP Urges CMS to Make Administrative Changes to the Sustainable Growth Rate (SGR) Formula for Updating the Medicare Physician Fee Schedule

The Honorable Mark McClellan, M.D., Ph.D.
Administrator
Centers for Medicare & Medicaid Services
200 Independence Avenue, SW
Room 314-G
Washington, DC 20201

Dear Dr. McClellan:

All of the undersigned organizations believe that Medicare's formula for paying physicians and other health professionals is broken. Beginning in 2006, the Sustainable Growth Rate (SGR), which is part of this formula, will cut reimbursements by five percent a year for seven consecutive years, with additional cuts for several years thereafter. Without changes, 2014 payment levels for these practitioners are projected to be about 30 percent less than in 2005. Such an enormous reduction defies logic and would be debilitating for medical practices.

We appreciate that you have spoken positively about the need to correct this situation before it greatly impedes beneficiary access to high quality care. Although a complete solution likely will require congressional action, there are a number of steps that CMS could take administratively to improve the current formula and facilitate legislation in this area. In particular, we believe that it is within your authority to remove physician-administered drugs from the SGR calculation and include the full costs of new benefits and coverage decisions in the SGR target.

Removal of the cost of prescription drugs Congress intended the SGR to account for Medicare spending on physician/practitioner services. However, even though drugs are products and not "physician services" as defined in the law, the Centers for Medicare & Medicaid Services (CMS) includes the cost of drugs in the SGR. Due to increasing technology and growing demand, spending on these drugs is rising far more rapidly than spending on physicians' and other practitioners' services. Combining the two creates an inaccurate picture of growth in services. Removing drugs from the SGR formula thus is a logical step towards improving the accuracy of the current formula.

Inclusion of the full impact of law and regulations The current SGR calculation fails to adequately capture the impact of changes to laws and regulations. For example, although Medicare has new screening benefits, the SGR targets do not appear to account for the downstream services that result when screenings reveal health problems. The same is true of the Medicare prescription drug benefit, which will unquestionably lead to more medical visits, thus generating additional tests and care. The SGR calculations also need to account for this inevitable spending. Additionally, the impact of CMS coverage decisions is excluded from the SGR entirely, even though those decisions significantly influence patient demand. Such changes in law and regulation are likely very beneficial for patient care, but inappropriately result in negative payment updates through the SGR calculation.

These suggested adjustments represent clear and decisive steps in the right direction, even if they will not solve all of the problems associated with Medicare's reimbursement formula. We urge you to make these improvements now in order to facilitate congressional efforts to reform this broken system before 2006. Please let us know how we can assist, and thank you for your continuing efforts to ensure beneficiary access to high quality care.

Sincerely,

American Academy of Audiology
American Academy of Child and Adolescent Psychiatry
American Academy of Dermatology Association
American Academy of Facial, Plastic and Reconstructive Surgery
American Academy of Family Physicians
American Academy of Neurology
American Academy of Nurse Practitioners
American Academy of Ophthalmology
American Academy of Otolaryngology - Head and Neck Surgery
American Academy of Pediatrics
American Academy of Physical Medicine and Rehabilitation
American Academy of Physician Assistants
American Academy of Sleep Medicine
American Association for Thoracic Surgery
American Association of Clinical Endocrinologists
American Association of Clinical Urologists
American Association of Electrodiagnostic Medicine
American Association of Neurological Surgeons
American Association of Nurse Anesthetists
American Association of Orthopaedic Surgeons
American College of Cardiology
American College of Chest Physicians
American College of Emergency Physicians
American College of Gastroenterology
American College of Nurse-Midwives
American College of Nurse Practitioners
American College of Obstetricians and Gynecologists
American College of Osteopathic Family Physicians
American College of Osteopathic Surgeons
American College of Physicians
American College of Radiology Association
American College of Rheumatology
American College of Surgeons
American Gastroenterological Association
American Geriatrics Society
American Medical Association
American Medical Directors Association
American Medical Group Association
American Nurses Association
American Occupational Therapy Association
American Optometric Association
American Osteopathic Academy of Orthopedics
American Osteopathic Association
American Physical Therapy Association
American Podiatric Medical Association
American Psychiatric Association
American Psychological Association
American Society for Clinical Pathology
American Society for Gastrointestinal Endoscopy
American Society for Reproductive Medicine
American Society for Therapeutic Radiology and Oncology
American Society of Addiction Medicine
American Society of Anesthesiologists
American Society of Cataract and Refractive Surgery
American Society of Clinical Oncology
American Society of General Surgeons
American Society of Hematology
American Society of Nephrology
American Society of Neuroradiology
American Society of Plastic Surgeons
American Speech-Language-Hearing Association
American Thoracic Society
American Urogynecologic Society
American Urological Association
Association of American Medical Colleges
Association of Women's Health, Obstetric and Neonatal Nurses
Cleveland Clinic Foundation
College of American Pathologists
Congress of Neurological Surgeons
Emergency Department Practice Management Association
Heart Rhythm Society
Infectious Diseases Society of America
Joint Council of Allergy, Asthma and Immunology
Marshfield Clinic
Mayo Clinic
Medical Group Management Association
National Association for Medical Direction of Respiratory Care
National Association of Social Workers
National Medical Association
National Organization of Nurse Practitioner Faculties
National Rural Health Association
North American Spine Society
Renal Physicians Association
Society for Cardiovascular Angiography and Interventions
Society for Vascular Surgery
Society of Critical Care Medicine
Society of General Internal Medicine
Society of Gynecologic Oncologists
Society of Hospital Medicine
Society of Interventional Radiology
Society of Thoracic Surgeons
The Endocrine Society