ACP: Governmental Affairs and Public Policy - AACP Requests That Physician-Administered Drugs Be Removed From SGR Formula

Advocacy

ACP Requests That Physician-Administered Drugs Be Removed From SGR Formula

Letter also sent to Roy Ranthum, Senior Health Policy Advisor, National Economic Council

September 30, 2005

Joshua B. Bolton
Director, Office of Management and Budget
725 17th Street, NW
Washington, D.C. 20503

Via Fax: 202-395-3888

Dear Mr. Bolton:

The American College of Physicians (ACP), representing over 119,000 internal medicine physicians and medical students, is requesting your support to correct the flawed Sustainable Growth Rate (SGR) formula currently projected to reduce payments for physicians by 4.4 percent in 2006 and by a cumulative 26 percent reduction from 2006-2011. While the College strongly believes Congress needs to replace the SGR formula based approach to controlling Medicare Part B expenditures with one that allows for analysis of the reasons for volume and intensity growth and appropriate measures to reduce inappropriate volume increases, we are specifically requesting in this letter your support of an interim step requiring the Centers for Medicare and Medicaid Services (CMS) to retroactively remove physician-administered drugs from the SGR formula calculation.

The College believes that many physicians, particularly those in small office settings who treat the majority of Medicare beneficiaries, cannot continue to remain in practice or deliver the same level of care to Medicare beneficiaries with the amount of reimbursement reductions projected by the current SGR formula. In addition, these significant reimbursement cuts will negatively impact physicians' ability to purchase the necessary health information technology (HIT) and implement changes in their office work flow to participate effectively in the value-based purchasing and pay-for-performance initiatives currently being recommended by the Medicare Advisory Payment Commission (MedPAC), CMS and Congress. While the College believes these initiatives have the potential to help control growth in Medicare spending through facilitating more efficient, effective care, many physician practices will be unable to absorb the costs to implement these initiatives while seeing their Medicare reimbursement payments sharply reduced.

As you are undoubtedly aware, the request to remove physician-administered drugs from the SGR formula is not new. In 2002 and in 2004, the College was one of a large number of physician organizations that requested in a joint letter to the CMS Administrator that CMS exercise its administrative authority to remove physician administered drugs from the SGR formula. In July 2005, House Ways and Means Committee Chair, Representative Bill Thomas, and Ways and Means Subcommittee on Health Chair, Representative Nancy Johnson, sent a joint letter to Administrator Mark McClellan urging similar action. The College, along with the American Medical Association and other medical specialty groups, has also previously received a legal opinion explaining that CMS both has the administrative authority to enact this requested change and that the cost of physician-administered drugs was originally incorrectly placed within the SGR formula.

The College is aware that this requested action will have the effect of increasing projected Medicare Part B costs and, consequently, increase Part B premiums for beneficiaries. However, we recently learned that significant unexpected savings in the cost of the new Medicare prescription drug program, resulting from the aggressive competitive bidding among the private drug plans, would result in overall savings in how much beneficiaries will pay out of pocket and a reduction in the Medicare baseline projections when both Medicare Part B and Part D are taken into consideration. Even with the very modest increase in Part B premiums that would result from removing drugs from the SGR, beneficiaries will benefit from having to pay less for their care when both parts of the program are considered together. We support the use of the baseline savings from Part D to fund the requested change.

The College would greatly appreciate your support in facilitating this necessary change in the SGR formula. As noted above, failure to accomplish this goal could result in physician access problems for Medicare beneficiaries, as well as barriers to improved quality of care from promising HIT and pay-for-performance initiatives. Please feel free to contact me if your have any questions regarding our request.

Sincerely,

Robert B. Doherty
Senior Vice President
Governmental Affairs and Public Policy