Thanks to aggressive lobbying by CMA and AMA, and powerful grassroots calls for action from physicians, Congress on Saturday passed legislation to stop the 5 percent Medicare sustainable growth rate (SGR) cut that was scheduled to take effect January 1. The legislation will freeze the Medicare conversion factor for physician reimbursement at 2006 levels for one year and would give a 1.5 percent SGR increase to physicians who report on at least three quality measures starting July 1, 2007.

Approved by a 367 – 45 vote in the House and a 79 – 9 vote in the Senate, the bill also sets aside funds to help offset a projected payment cut in 2008.

“CMA is thankful to Congress for stopping the 5 percent SGR cut that could have further threatened access to care for California’s seniors. Reversing the cut, which cost $13 billion, was an extremely difficult task in the current political and financial environment in Washington, D.C.,” says CMA President Anmol S. Mahal, M.D. “However, CMA is extremely concerned with the new legislated framework for the quality reporting program and we will be working closely with Congress and CMS to improve the program in the coming year. “

The quality program, which will use Medicare’s current Physicians Voluntary Reporting Program as its framework, does not meet CMA and AMA’s standards for quality reporting. CMA will continue to work with Congress to improve this program to ensure that it is workable for all physicians in all modes of practice.

The freeze only applies to the 5 percent SGR cut, and would not affect the changes to the work relative value units (RVUs) stemming from Medicare’s recently completed five-year review. The new work values place a stronger emphasis on primary care, with significant increases to the values for evaluation and management (E&M) services, including pre- and postoperative surgical care. The new work values are based on recommendations made by the AMA/Specialty Society RVS Update Committee.

These new work values will increase spending for E&M services by $4 billion next year. However, federal budget neutrality requirements forced CMS to apply a 5.5 percent reduction to all services. This 5.5 percent reduction is separate from the averted SGR cut and is not affected by this new legislation.

The bottom line: Some physicians will still see net decreases in Medicare payments in 2007, but those decreases will be much smaller than they would have seen without the SGR freeze. And many physicians will see net increases.

“CMA is disappointed by the Medicare fee schedule cuts imposed on physicians because of the relative value changes,” says Dr. Mahal. “While we applaud overdue increases to the E&M codes, those increases should not be paid for with offsetting cuts to other physicians.”

Congress did not include CMA’s proposed fix to the geographic practice cost index (GPCI) because the legislation was limited to extensions of current law. We do have strong assurances from California’s Democratic leaders in Congress that they will help us fix our GPCI problem next year.

“CMA also plans to embark on an aggressive campaign next year to overhaul the entire physician payment system with a long-term solution,” says Dr. Mahal. “Physicians cannot continue to practice in such an unstable environment, waiting for Congress to act at the last minute to reverse such devastating cuts.”

Once again we would like to extend a sincere thank-you to all physicians who kept the pressure on Congress. There is no way Congress would have acted without major pressure from the physician community.

The bill also increases health savings account contribution limits and extends for one year Medicare’s Recovery Audit Contractor Program. More details, including a summary of the bill. Click here for more details on the bill's provisions.

Contact: Elizabeth McNeil, 415/882-3376 or emcneil@cmanet.org.