Medical organizations are recommending that Congress repeal Medicares sustainable growth rate, or SGR, formula and replace it with a system that reflects increases in physicians practice costs. In a proposal shared with lawmakers last month, the American Medical Association and 86 other medical organizations recommend that Congress enact legislation that would repeal the SGR and ensure that physicians are reimbursed like other providers, such as hospitals and nursing homes, whose formulas are based on practice costs. If immediate repeal isnt possible, Congress should establish a transition period to eliminate the formula and ensure positive updates to physicians until the repeal takes effect, the groups urged.
The SGR ties annual expenditure targets to the economy and has called for negative payment updates over the past several years. Physicians in 2008 face a 10% payment cut under the current SGR formula. The Congressional Budget Office, however, has estimated that a full repeal would be costly: Replacing it with annual updates based on inflation would increase physician payments by about 2% annually, but would cost the federal government $262 billion over 10 years, plus $70 billion in higher costs for beneficiaries, if they arent shielded from the impact. In other recommendations, the AMA says that the Physician Quality Reporting Initiative, a program that sets up a financial incentive for physicians to participate in a voluntary quality reporting program, be re-examined before being expanded into future years. Other groups urging change include the American College of Physicians, American Academy of Family Physicians and American College of Radiology.