Published 11/1/2011
Richard J. Martin, JD; Madeleine Lovette

AAOS Opposes MedPAC’s SGR “Fix”

On October 6, the Medicare Payment Advisory Commission (MedPAC) voted 15–2 in favor of adopting a proposal to repeal the sustainable growth rate (SGR) formula that establishes physician pay under Medicare. Under the proposal, current payment rates would remain flat for primary care physicians over the next decade and payments to specialists would be cut.

The proposal would reduce the 10-year SGR cost by about $100 billion, primarily by freezing Medicare rates for most primary care physician services while cutting other physician services by 5.9 percent per annum for 3 years (a total of just under 18 percent), then freezing those rates for an additional 7 years. In addition, the proposal would cut a number of other provider payments to cover the estimated $200 billion cost.

MedPAC members also voted to support the following additional recommendations:

  • enhancing data collection from a variety of sources to establish more accurate work and practice expense values
  • using the data collected to identify overpriced fee-schedule services
  • increasing the shared savings opportunity for providers who participate in two-sided risk accountable care organizations

The two negative votes were cast by physician members of the commission—Ronald D. Castellannos, MD, a urologist from Florida, and Karen R. Borman, MD, a general surgeon from Pennsylvania. Both expressed strong concern about how the 5.9 percent cuts would affect access, quality, and the movement toward innovative payment and delivery systems. Other commissioners expressed concern about the proposal, but ultimately voted in favor of it.

MedPAC Chairman Glenn M. Hackbarth, JD, assured commission members that approving the recommended 10-year pathway was not an irrevocable decision because MedPAC would go back and reassess payment adequacy in the future.

AAOS response
The American Association of Orthopaedic Surgeons (AAOS) recognizes that this proposal presents a real threat to orthopaedists and their patients. The AAOS is concerned that physician payment cuts will not only jeopardize the health of millions of America’s seniors, but will also further exacerbate a system that rewards quantity of care instead of value.

The AAOS has implemented an aggressive strategy to eliminate any negative impact the proposal may present. The AAOS office of government relations in Washington, D.C., diligently monitored MedPAC activities leading up to the proposal. Even before the Commission voted on and finalized the proposal, the AAOS sent a letter to all 535 members of Congress expressing opposition to the preliminary recommendations.

In addition, AAOS co-signed a second letter with numerous other medical organizations that was sent directly to the Commission. That letter urged MedPAC members to rethink the initial recommendations. AAOS staff were present at the meeting when the final recommendations were made public. Immediately following the final vote, staff advised leadership and fellows of the developments. An advocacy alert urged AAOS members to contact their Congressional representatives to express their disappointment with the recommendations.

The AAOS has also been in regular contact with members of Congress and their health policy staff to express opposition to the proposal and to assess Congressional reaction. Members of the AAOS Council on Advocacy—including Council Chair Peter J. Mandell, MD; Orthopaedic Political Action Committee Chair Stuart L. Weinstein, MD; Health Care Systems Committee Chair Kevin J. Bozic, MD, MBA; Board of Councilors Chair David Teuscher, MD, and Chair-Elect Fred C. Redfern, MD; as well as Council members Douglas W. Lundy, MD; Richard F. McKay, MD; Alfonso Mejia, MD; and Laura L. Tosi, MD—met with House Speaker John Boehner (R-Ohio), Majority Leader Eric Cantor (R-Va.), Majority Whip Kevin McCarthy (R-Calif.), and the office of Minority Leader Nancy Pelosi (D-Calif.) to urge Congress not to accept the MedPAC proposal.

The AAOS is continuing its efforts on Capitol Hill by scheduling meetings with House and Senate leadership from both parties to express dissatisfaction with the MedPAC proposal. AAOS will continue to monitor stakeholder and Congressional reactions to the MedPAC proposal and keep members advised of advocacy actions and related developments.

An uncertain future
With the Commission’s endorsement, the recommendations are now in the hands of Congress. Congress, however, has no obligation to either accept or reject the recommendations. Although MedPAC’s SGR proposal does not appear to have much support in Congress, there is considerable interest in repealing the SGR. Typically Congress has ignored MedPAC’s payment reduction recommendations.

Without Congressional action by December 31, 2011, the SGR will trigger a 29.5 percent reduction in payment to all providers under the current Medicare physician fee schedule. In addition, the MedPAC proposal or other alternatives for fixing the SGR may be addressed by the Congressional Joint Select Committee on Deficit Reduction (“super committee”) charged with recommending at least $1.5 trillion in additional deficit reduction steps to be undertaken over a 10-year period. Congress may also address the MedPAC recommendations and possible SGR repeal through a stand-alone bill or as part of legislation to address the pending SGR cut.

The AAOS continues to advocate for Congress to fix the SGR formula through physician-led quality improvement initiatives that include incentives for providing high quality and high value care. The AAOS remains hopeful for opportunities to redirect Congressional energies toward a viable SGR fix rather than the draconian cuts proposed by MedPAC.

Richard J. Martin, JD, is the manager, federal regulatory affairs in the AAOS office of government relations. He can be reached at rmartin@aaos.org

Madeleine Lovette is the communications specialist in the AAOS office of government relations. She can be reached at lovette@aaos.org

Additional Resources

AAOS Comments on ACO Proposed Regulation

AAOS Comments on ACO Antitrust Proposed Regulation

Letter to House Energy and Commerce Committee on SGR

Summary of Proposed CMS Rule Regarding ACOs

AAOS ACO Primer (in PDF format)

ACOs: The future of healthcare delivery?

ACOs: New models for care and compensation

Collaborating on care, changing the culture

Don’t give up on the ACO

AAOS letter to members of Congress

Letter to MedPAC

AAOS Letter to Super Committee Urging the Importance of Medical Liability Reform (login required)

Talking points on SGR

Medicare Physician Payment Formula Primer (Log in required)

Principles of Health Care Reform and Specialty Care Position Statement

Existing Government Programs Position Statement

Principles of Medicare Reform Position Statement