Capitol Hill Report: SGR Is Just a Small Part of a Big Train Wreck

July 23, 2012


By Mike Amery, Legislative Counsel, Federal Affairs, (202) 506–7468,

As Congress heads toward November elections, very little continues to be done in Washington. The Supreme Court upheld health reform and House Republicans promptly repealed it, again, for the 31st time. The Senate, controlled by Democrats, has no interest or intention of bringing up the issue even once.

As little happens, the nation draws closer to a January 1, 2013, fiscal cliff of expiring policies that are vital to the health of the economy.

The biggest concern for physicians continues to be the looming Sustainable Growth Rate (SGR) formula that calls for a cut of nearly 30 percent in Medicare payments, but this is one of the smaller issues that Congress must deal with.

The list of expiring provisions and the cost of a one–year fix for each is daunting:

  • Expiration of income tax cuts, reduced rates for estate and gift taxes, and indexing of the Alternative Minimum Tax (AMT) – $221 billion
  • Payroll tax holiday – $95 billion
  • Defense cuts mandated by the sequester – $55 billion
  • Non–defense cuts mandated by the sequester – $55 billion
  • Expiration of emergency unemployment insurance benefits – $26 billion
  • Expiration of tax extenders – $65 billion

And then the comparatively little SGR fix – $11 billion.

Defense Contractors Winning the Sequester Fight

As I have discussed in previous Capitol Hill Reports, the issue of sequester has to be of great concern to the physician and patient community. Sequestration is the result of the congressional deal from early 2011 that created the “Super Committee” to come up with $1.2 trillion in deficit reduction over the next ten years.

The Super Committee failed, triggering automatic cuts of $55 billion to defense and $55 billion to discretionary programs beginning January 1, 2013. Included are a two–percent reduction in Medicare physician payments and an eight–percent cut to NIH, as examples of just two of the many programs facing reductions.

The physician and patient communities are talking with members of Congress about sequestration every day. I had an opportunity to discuss it with several Democrats this week, including Minority Leader Nancy Pelosi (D–CA), Energy & Commerce Ranking Member Henry Waxman (D–CA), and Sen. Ben Cardin (D–MD), but all I hear is how many defense industry jobs will be lost if their cut goes through.

The House passed legislation last week on a 412–2 vote that would give the Obama administration 30 days to provide details on how it will deal with the required cuts. If that actually happens it will surely focus the issue when specific cuts are detailed, but until then we have a lot of work to do to prevent some fiscal damage to health programs by increasing congressional and public awareness to the levels that the defense industry has. Expect an action alert from AAN soon after the end of the August recess.

CMS Releases 2013 Fee Schedule

CMS issued the proposed rule for the 2013 Medicare Physician Fee Schedule last week. The rule updates payment policies and rates for physicians.

As it stands, the proposed rule estimates that most neurologists can plan on a one–percent increase, but the full impact won’t be known until the release of the final rule which will contain more data. The intended beneficiaries will be primary care practitioners, but neurology may be able to take advantage of some of the increases aimed at primary care. The increase is in a proposed payment for managing non–face–to–face services related to transitioning a beneficiary from an inpatient facility to the primary physician through the creation of a new HCPCS G code. Neurologists would be able to report this code. Once the rule is final, the AAN will be working to help members evaluate whether their practice is performing these services.

One issue of concern in the rule is related to the physician value–based payment modifier that is targeted for a one–percent payment reduction for physicians in groups of 25 or more who do not participate in PQRS in 2015.

AAN staff is reviewing these provisions and the rest of the proposed rule and will submit comments to protect the interests of neurologists by the September 4, 2012, deadline. If you have any suggestions, let us know.

The Palatucci Advocacy Leadership Forum

I know that many of the readers of Capitol Hill Report are graduates of the Palatucci Advocacy Leadership Forum, but if you aren’t, I hope you will think about applying this year.

Dr. Nancy Hammond of Kansas is a 2010 grad who recently shared a clip of an interview she did with local television. This is exactly the type of training you will get on “media day” at  the Forum. I hope you will take a look at

The AAN is now accepting applications for the 2013 Donald M. Palatucci Advocacy Leadership Forum, which will be held January 17 to 20, 2013, at the Rancho Bernardo Inn in San Diego, CA.

I hope I will see you there!