The story line on 2011 is simple: It’s healthcare reform and the continuing call for providers to hold the line on healthcare costs while improving quality. This week on Repertoire’s blog we’ll take a look at some of the leading stories of 2011 based off of the December issue’s cover story. For the full story and issue visit


Physician pay up in the air


The issue of Medicare reimbursement was never far from the discussion of physician/hospital alignment in 2011. Much debated throughout the year was the method in which physicians are reimbursed under Medicare Part B. The current formula, called the Sustainable Growth Rate, or SGR, was created as an attempt to keep a lid on utilization of services. It ties reimbursement to the performance of the economy at large, specifically, gross domestic product. Because medical expenditures have exceeded annual targets in every year but one since SGR was instituted in 2001, physicians have been slated to get a pay cut every year. And each year, Congress has postponed – but not eliminated – the proposed cut. Consequently, proposed cuts have been building over the past 10 years, and were they to be applied, physicians could be out billions of dollars.


In October, the Medicare Payment Advisory Commission, or MedPAC, recommended to Congress that SGR be scrapped, thus severing the link between future payment updates and cumulative expenditures for physicians’ services. In its place, the Commission proposed a 10-year path of legislated updates. For primary care practitioners, the Commission recommended that payment rates be frozen at their current levels. Specialists, on the other hand, would see reductions in the fee schedule’s conversion factor in each of the first three years, and then a freeze in the conversion factor for the subsequent seven years.


If the proposal seemed to favor primary care physicians, that was no accident. “The Commission finds it crucial to protect primary care from fee reductions, considering that the most recent data show that access risks are concentrated in primary care,” wrote MedPAC in its Oct. 14 letter to members of Congress.


Needless to say, some physician groups were unhappy with the proposal.


“Looming primary care shortages require focused solutions, we agree,” said American College of Cardiology CEO Jack Lewin, M.D., in a statement. “But this proposal somewhat misaligns the interests of primary and specialty doctors, rather than focusing on incentives to work together to improve quality, efficiency, coordination of care, and outcomes. The SGR must be repealed, but we believe Congress should replace it with a payment system that promotes high quality, cost effective care.”

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