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AAMC Submits Comments to Ways and Means Committee on SGR Replacement

June 1, 2012—The AAMC submitted a May 25 comment letter  to the House Ways and Means Committee in response to the committee’s request for input from the physician community regarding how best to replace the sustainable growth rate (SGR) formula and move towards a Medicare physician payment model that incorporates value-based measures and practice arrangements that improve health outcomes and efficiency.

The request was similar to the call for reforms to the SGR in March 2011 [see Washington Highlights, April 29, 2011], but sought more detail on ways to reward physicians for cost and efficiency, alternative payment models, engage patients, and address regulatory relief.

The AAMC letter states that “AAMC members actively are participating in new payment models including the Pioneer Accountable Care Organizations (ACOs), the Medicare Shared Savings Program, and the Bundling Payments for Care Improvement initiative. In addition, academic medical centers received half of the [Department of Health and Human Services (HHS)] Health Care Innovation grants that were awarded.” The letter also stresses, “Each of these programs is in its infancy and should be given time to develop and be evaluated before Congress considers changes based on the concepts that they are testing.”

The letter states that the goal “should be the creation of a payment system that adequately compensates physicians based on such factors as the services provided, complexity of the patients served, and geographic area where the physician practices, while accounting for increased costs due to inflation.”

The AAMC also recognizes the efforts at the Centers for Medicare and Medicaid Services (CMS) to implement several programs that move toward pay-for-performance or a system that pays for value.  The letter cautions, “While the AAMC supports measuring the cost and quality of services provided, we are concerned that several technical issues related to the physician value modifier have yet to be resolved. Many private payers have implemented successfully pay-for-performance programs, but they do not work under the same constraints as CMS.”

Finally, the letter also raises concerns that CMS is unable to duplicate private payers’ models as they “do not need to work within the budget neutrality constraints of the physician value modifier, and can provide ‘upside only’ models that allow practices to be incentivized to meet certain cost and quality targets.”  The letter continues, “In contrast, the CMS physician value modifier is based on relative performance, which leaves open the possibility that a financial penalty can be imposed despite improved performance of a physician or group practice.”

The AAMC urged Congress “to take into account the numerous challenges related to this value modifier as it considers alternatives to the SGR update.”


Len Marquez
Director, Government Relations
Telephone: 202-862-6281

Ivy Baer, J.D., M.P.H.
Senior Director and Regulatory Counsel
Telephone: 202-828-0499


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Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

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Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806