Failure to resolve budget reconciliation leaves patients and doctors uncertain

December 22, 2005

The nation's patients and their doctors today are left uncertain about a scheduled 4.4 percent cut for Medicare reimbursement. The effects of this uncertainty go well beyond the amounts that physicians are paid. They have far-reaching impact on the access the aging population of America will have to future health care.

On Monday, the House passed a budget reconciliation bill that extended the current Medicare physician payment rates through 2006. The Senate version of the budget bill, passed yesterday, includes an identical provision to halt the cuts. However, because the Senate accepted several procedural moves that altered the conference report, the bill now must go back to the House for final approval. If changes are not made to the flawed sustainable growth rate (SGR) formula by Jan. 1st, the cuts will take effect.

"Patients and physicians will not understand why technicalities and politics are delaying congressional action to halt devastating Medicare cuts," said C. Anderson Hedberg, MD, FACP, president of the American College of Physicians (ACP). "We call on Congress and the Centers for Medicare and Medicaid Services (CMS) to do whatever is necessary to stop the cuts. Both the House and Senate have agreed the cuts should be halted, and we appreciate their good intentions. Yet we are faced with uncertainty and confusion, instead of the decisive action in Washington that our patients require."

"We also urge CMS to consider taking the administrative steps available to them to delay the cuts pending Congress's return," Dr. Hedberg continued. "After all, both the House and the Senate made their intentions clear in their respective reconciliation packages."

The SGR formula unfairly ties the fees paid for physician services to the performance of the overall economy. Because costs of taking care of an aging population, many of whom have multiple chronic diseases, continue to increase at a faster rate than overall growth in the economy, calculating physician payments using the SGR formula would trigger across-the-board cuts. As a result, Medicare payments for physician services keep decreasing while the cost for doctors to provide care keeps climbing.

Dr. Hedberg stated that if Congress and CMS do not take action prior to January 1st, the cuts will begin to have immediate adverse consequences for patients, noting that the cuts will go into effect precisely the same day as the new Medicare Part D drug benefit. Medicare patients will be increasingly turning to their physicians and their office staff for assistance on this new benefit. The fee cuts will make it more difficult for physicians to devote the resources needed to help with the transition to the Part D benefit.

"In the event that both Congress and CMS fail to take action before the first of the year, it will be imperative that Congress return promptly to Washington and immediately enact legislation to reverse the cuts, retroactive to January 1, 2006," added to Dr. Hedberg. "The longer the cuts are in effect, the greater the harm that will be done. Patients and physicians need to know that they will be made 'whole' from any cuts that result from inaction in Washington."

ACP will also be calling on Congress to go beyond just halting the cuts, and move toward reforming the overall payment and delivery system. "A halt to the SGR cuts is an essential first step, but it is not the solution to Medicare's reimbursement problems," said Dr. Hedberg. "ACP will challenge lawmakers to work with us to enact an ambitious policy agenda to replace the SGR and other dysfunctional Medicare payment policies with a system that rewards and recognizes the value of high quality, patient-centered care by a personal physician."

Just last week, ACP released a sweeping set of recommendations on tying physician payments to quality. This paper, which is available at, promotes continuously improving quality care across the health care delivery system through a transparent and fair pay-for-performance system. Early in 2006, ACP will be releasing additional policy proposals to implement the College's vision of a reformed health care financing and delivery system that is centered on patients' needs, resulting in better quality at lower overall costs.
The American College of Physicians is the largest medical specialty organization and the second-largest physician group in the United States. ACP members include 119,000 internal medicine physicians (internists), related subspecialists, and medical students. Internists specialize in the prevention, detection and treatment of illness in adults.

American College of Physicians

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