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Looming Medicare Cuts Will Disproportionately Hurt Physicians in Small Practices

ACP Asks Congress To Pass Legislation To Avert Pending Physician Pay Cut

November 8, 2007

(Washington) Focusing on his experience as a physician in a small medical practice in rural Virginia, Jeffrey P. Harris, MD, FACP, president-elect of the American College of Physicians (ACP) testified today before the House Small Business Committee Subcommittee on Regulations, Healthcare and Trade.

“As a community small business, we discovered first-hand the financial struggles that Medicare payments to physicians played on our practice,” noted Dr. Harris. “These practices are medicine’s small businesses, where much of their revenue is tied directly to Medicare’s flawed reimbursement rates and formulas.”

Approximately 20 percent of ACP members who are involved in direct patient care are in solo physician practices. And, about 50 percent are in practices of five or fewer physicians.

On Jan. 1, physicians face a 10.1 percent cut in Medicare reimbursements. These cuts are due to the flawed Sustainable Growth Rate (SGR) formula that is used to calculate Medicare payments to physicians. The SGR formula was created in 1997 and ties physician payments to growth in the overall economy. When growth in physician expenditures exceeds growth in the economy, the difference is subtracted from physician payments. The SGR formula has led to scheduled annual cuts for six consecutive years.

“Research shows that health care managed and coordinated by a patient’s personal physician, using systems of care centered on patients’ needs, can achieve better outcomes for patients and potentially lower costs by reducing complications and avoidable hospitalizations,” continued Dr. Harris. “Instead of encouraging high quality and efficient care centered on patients’ needs, however, existing Medicare payment policies have contributed to a fragmented, high volume, over-specialized and inefficient model of health care delivery that fails to produce consistently good quality outcomes for patients.”

ACP is asking Congress to avert the immediate SGR cut, but also go a step beyond. The College is asking Congress to set a timeline for completely eliminating the use of the SGR formula. ACP also wants Congress to direct Medicare, as part of replacing the SGR formula, to change payment policies to support patient-centered, physician-guided care management based on the patient-centered medical home model of care.

“Medicare patients deserve the best possible medical care,” concluded Dr. Harris. “They also deserve a physician payment system that will help physicians deliver the best care possible.”

The American College of Physicians is the nation’s largest medical specialty organization. Membership is composed of 124,000 internal medicine physicians (internists) and medical students. Internists provide the majority of health care to adults in America. Internists are specialists in adult medicine and provide comprehensive care to adult patients.

David Kinsman, (202) 261-4554
Jacquelyn Blaser

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