MedPAC Votes to Repeal the Medicare Sustainable Growth Rate; Physicians Not Happy with Alternative Proposal

By a vote of 15-2, the Medicare Payment Advisory Commission (MedPAC) voted Thursday to repeal the controversial sustainable growth rate (SGR) formula used to set Medicare physician reimbursement fees. MedPAC wants to replace the SGR with a plan that would reduce reimbursements by $335 billion over ten years.

The MedPac proposal includes cutting reimbursements to specialists by 5.9 percent for three years and then freezing those rates for seven years, and by freezing payments to primary care physicians throughout the same period. The plan calls for reducing payments to Medicare Part D drug plans by 32 percent, and post-acute care facilities by 21 percent, with a 14 percent reduction for Medicare beneficiaries.

The proposal has drawn criticism from physicians and hospitals. The two MedPAC members voting against the plan are physicians.

“The recommendations voted on today by MedPAC flies in the face of their previous recommendations to stop harmful physician cuts that threaten access to care for patients,” AMA President Peter W. Carmel, MD, said in response to the MedPAC action.

On Monday a number of national specialty societies and the AMA asked the Commission to reconsider its proposal to revise the Sustainable Growth Rate (SGR) used to determine Medicare physician reimbursement rates.

In a letter to MedPAC Chair Glenn M. Hackbarth, JD, MA, the physician organizations stated that they cannot support the proposed plan in its present form “because it retains many of the SGR’s flaws, undermines physicians’ ability to participate in payment and delivery reforms, and calls for payment rates that the Commission itself has previously said could reduce Medicare beneficiaries’ access to medical care.”

Several concerns and recommendations were included in the letter:

  • MedPAC should examine a broader set of proposals to pay for SGR repeal
  • Other Medicare policies compound MedPAC’s recommended payment cuts
  • Revenue projections in changing times are unreliable
  • The proposal could intensify existing access threats
  • Unintended consequences could raise cost of care and derail payment reforms

Click here to read the letter in its entirety.

MedPAC’s action comes as the NCMS and other physician organizataions push Congress to repeal the SGR and develop a plan to offset a scheduled 29.4 percent cut in physician reimbursements on January 1, 2012. The NCMS is collaborating with other state and national physician organizations and with the NC Congressional Delegation to find a permanent solution to the SGR problem. For the past ten years Congress has chosen to delay cuts and not take further action. However, there are indications that Congress and the Obama administration may not intercede and delay cuts that go into effect in January. The NCMS will provide updates and alerts on further developments in the Bulletin and at


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