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American College of Physicians Commends MedPAC Support for Physician-Directed Care Coordination

Also Cautions Against Options for New Spending Targets

March 1, 2007

Washington –The American College of Physicians (ACP) today commended the Medicare Payment Advisory Committee (MedPAC) on the report it released this morning on redesigning Medicare payment policies to support physician-directed care coordination and to achieve better value for beneficiaries.

ACP concurred with MedPAC’s conclusion that the Sustainable Growth Rate (SGR) is flawed and further called on Congress to repeal this annual physician fee schedule update methodology. The ACP expressed concern about several options discussed in the report that would replace the SGR with alternative spending targets that would introduce new administrative and political complexities without fixing the flaws inherent in the SGR.

In a letter signed by ACP President Lynne M. Kirk, MD, FACP to key Congressional health care committee members, ACP said the congressionally-mandated effort gives “an excellent, thorough, balanced and well-documented report on a very complex and critical issue.”

The organization of 120,000 physicians and medical students noted that “a dysfunctional healthcare delivery and payment system directly contributes to the less than desirable quality and high costs currently experienced in this country.”

In its letter, ACP reacted to three particular issues addressed by MedPAC:

  • Problems with the Medicare Physician Fee Schedule Sustainable-Growth-Rate (SGR) update methodology.

  • The need to improve the value of the Medicare physician payment system.

    The College noted its agreement with MedPAC that major reforms are needed to improve the value of the Medicare physician payment system.

    ACP also emphasized that it is pleased with MedPAC’s recognition of the value of promoting the use of primary care and physician-directed care coordination to increase clinical quality and efficiency. It added that it was surprised that little mention was made of the “patient-centered medical home” (PC-MH), a model that would provide beneficiaries with access to systems-based care coordinated by a personal physician at a single and accessible practice site (the patient’s medical home).

  • ACP noted that although the Commission makes no recommendation on adoption of regional targets to replace the national SGR target, the report presents regional targets as an option and suggests that they might be more effective than a national one. The College believes that regional targets will likely suffer from many of the same problems as the national SGR target, while creating many new administrative and political complexities:

  • Like the current SGR, regional targets would not differentiate between efficient and inefficient providers within a region, and appropriate and inappropriate volume increases.

    This approach has the risk of unintended shifting of providers and services from high volume areas, which may also result in increased access problems for beneficiaries in these high volume areas.

    Finally, providing different updates in the physician fee schedule based on regional expenditure growth would likely encounter strong political pushback from constituents and their Congressional representatives in areas that are scheduled to receive lower updates, greatly politicizing the process of setting updates.

In its letter, ACP proposed an alternative pathway for eliminating the SGR that replaces it with a new methodology that will provide positive and predictable baseline payments and create powerful incentives for care coordination and quality improvement. “ACP’s alternative for eliminating the SGR – combined with other measures to introduce greater value into Medicare physician payments that are discussed in the MedPAC report and supported by the College – would create strong incentives for quality improvement and care coordination,” Dr. Kirk pointed out. “And this would happen without the complexities and likely unintended adverse consequences for beneficiaries of other forms of spending targets, either at a national or regional level.”

ACP concluded its letter by urging Congress to give careful consideration to the MedPAC report and to specifically enact changes in Medicare payment policies to:

  • eliminate the SGR;
  • create incentives for physician-directed care coordination through a patient-centered medical home;
  • support physicians’ ability to acquire the systems needed to manage and improve quality; and
  • address mis-valuation of services.

ACP contends that “these policies should be given a chance to demonstrate their effectiveness before any consideration is given to imposing another form of national or regional spending targets.”

The ACP letter is available upon request. Please call the contacts listed.

The American College of Physicians is the largest medical specialty organization and the second-largest physician group in the United States. ACP members include 120,000 internal medicine physicians (internists), related subspecialists, and medical students. Internists specialize in the prevention, detection and treatment of illness in adults.

David Kinsman, (202) 261-4554
Jacquelyn Blaser, (202) 261-4572

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