The AAN Takes a Stand on a Recent SGR Repeal Proposal

February 1, 2013

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Recently, Congress passed another Medicare Sustainable Growth Rate (SGR) fix that will postpone a 27 percent pay cut to physician services in the Medicare fee schedule until 2014. Congress has systematically postponed SGR cuts since 2002.

The SGR formula was enacted by the Balanced Budget Act of 1997, which continued Medicare payment reforms started with the creation of the relative value-based fee schedule in the late 1980’s. While the relative value-based updates were designed to set limits on how much Medicare pays per service, the SGR was supposed to limit the overall growth in Medicare spending. The formula sets the overall target amount of spending for all services each year and brings the actual Medicare spending back in line with the target.

The target spending approach, however, did not limit the volume of services. The more recent payment and delivery reforms try to limit the volume by directly changing physician behavior with incentives. Shared savings programs, for example, allow physicians to share among themselves savings they achieve if the actual total cost of care they provided is lower than the targeted total cost of care. Policymakers hope that these new payment/delivery models will bring desired savings in the Medicare program and help contribute to the replacement of the SGR.

Virtually everyone agrees that the SGR formula should be repealed, but there is a lack of acceptable ideas on how to pay for the repeal itself. Postponing the SGR each year for the last 10 years has accrued a $30 billion price tag. One of the SGR repeal proposals was developed by the Medicare Payment Advisory Commission (MedPAC), a group of experts who advise Congress on Medicare payments. Because MedPAC’s mandate is limited to Medicare, the Commission proposed offsetting the cost of the SGR repeal with a 5.6% annual cut across the board to all specialists for the next three years while freezing payments to primary care doctors. 

The AAN met with MedPAC leadership to explain our disdain with their proposal. The AAN position is that, like primary care, neurology should also be excluded from cuts to specialists to offset the SGR repeal.

Neurologists currently face similar challenges as primary care physicians in that both professions are seeing an influx of patients (neurology due to the increasing prevalence of neurological diseases and primary care due to the extended insurance coverage) and both professions are experiencing workforce shortages because, over the years, misaligned payment incentives have made non-procedural specialties less attractive to medical graduates. Neurology practices are struggling to stay afloat also because of the severe cuts to a few diagnostic procedures they perform (e.g. nerve conduction studies and electromyography (EMG)).

There is no doubt that reforms to the Medicare system, including SGR repeal, are necessary. But the AAN believes that neurologists must be adequately compensated so that they can continue to serve patients with complex neurological conditions. The AAN recently sent a letter to MedPAC restating our concerns.

The AAN is committed to positioning neurologists for success in the evolving health care environment. Please share your stories with us on how the recent cuts to nerve conduction and EMG studies are affecting your patients and your practice. Also, please share with us your experiences working with new payment and/or care delivery models by contacting Karolina Craft at kcraft@aan.com.