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AAMC Submits Comments on House Committees’ Revised SGR Replacement Proposal

April 19, 2013—AAMC President and CEO Darrell Kirch, M.D., submitted an April 15 comment letter  to the House Ways and Means and Energy and Commerce Committees in response to the committees’ request for feedback on their revised sustainable growth rate (SGR) repeal and reform proposal released in early April.  The AAMC and other stakeholders supplied comments on the original plan [see Washington Highlights, March 1, 2013], which the committees used to update and revise the proposal. 

The latest iteration offered greater detail on the three phases of SGR reform, which include repealing the Medicare SGR formula and providing a period of predictable physician payment updates; reforming Medicare’s fee for service (FFS) physician payment system to reward physicians who provide high quality care; and building on the improvements in quality by further rewarding physicians who deliver efficient care.  The revised plan asks further questions to stakeholders on incorporation of quality measures, appropriate methodology for determining efficiency, logistics of implementing Alternate Payment Models (APM), and how current law might be changed to ease transition to new payment models and decrease administrative burden on providers. 

The AAMC letter expands on previous comments and focuses on changes to reimbursement, appropriate quality measures and adequate risk adjustment, and reducing administrative burden on providers.   

In the letter, Dr. Kirch thanks the committees for their continued efforts to address Medicare physician payment reform and reiterates that fixing the SGR is crucial to ensure beneficiary access.  The letter also comments on the impact of the looming physician shortage, stating, “The AAMC believes it is absolutely crucial that Congress reform the SGR formula to ensure access for beneficiaries and stable payments for providers.  However, one critical component that often is overlooked in the payment discussion is the need to ensure there are enough physicians to meet the country’s needs, particularly with a growing number of Medicare beneficiaries.” 

To alleviate the physician shortage, the letter asks the committees to address an increase in GME funding stating, “It is critical that the 113th Congress address the need to increase Medicare support for Graduate Medical Education (GME).  I urge you to take this opportunity to address the physician shortage and guarantee provider access to Medicare beneficiaries and all patients by increasing Medicare support for GME.”        

Responding to the committees’ updated plan and questions, the AAMC advises the committees to ensure a positive update for providers to maintain beneficiary access stating, “Throughout all phases of the new model, Congress needs to ensure a positive update so that physician practices can be solvent during the transition.  Access to physician services has to be maintained, especially as more people enter the Medicare program.” 

The letter also comments on the proposed “Update Incentive Program” (UIP), which would incorporate performance on quality measures into physician payment rates.  With regard to the amount base percentage of physician payment that should fall under the UIP, the AAMC suggests “that Congress phase in the variable rate over time and limit the maximum variable rate to 2-3 percent, similar to the payment that is at risk in hospital performance programs.” 

The letter also offers AAMC support for giving providers the option to be measured and benchmarked at a group practice level and rewarding performance improvement over time.     

The letter also expresses AAMC’s understanding of the importance of improving efficiency and  reducing health care costs but cautions the committees on efforts to incorporate efficiency measures into Medicare physician payment stating, “Congress must recognize that currently there is little consensus about how to measure efficiency.”  The letter also stresses that any efficiency measures in physician payment reform must include improved methodology, adequate risk adjustment, and be provided in a timely fashion.

Finally, the letter offers insights on the development of alternative payment models based on experience the AAMC has gained as a “convener for a group of teaching hospitals participating in the current Centers for Medicare and Medicaid Innovation (CMMI) Bundled Payments for Care Improvements (BPCI) initiative.” 

The letter points out that “teaching hospitals and their physician faculty have been in the forefront of testing new payment models and healthcare delivery systems that focus on team-based care.”  The AAMC also cautions the committees that new payment models need sufficient time and resources to develop and that providers should be able to test and participate in multiple payment options.


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

Mary Patton Wheatley, M.S.
Director, Health Care Affairs
Telephone: 202-862-6297

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