Pay for SGR Repeal With War Savings, Says Organized Medicine

January 24, 2012

January 24, 2012 — The American Medical Association (AMA) and 109 other medical societies are urging Congress to use a peace dividend from military pullbacks in Iraq and Afghanistan to underwrite the massive cost of repealing Medicare's sustainable growth rate (SGR) formula for setting physician reimbursement.

The SGR formula calls for a 27.4% pay cut on March 1 unless Congress acts to avert it. Replacing the formula with something more equitable for physicians has bipartisan support. However, the cost of this move, put at $290 billion by the Congressional Budget Office if rates are merely frozen for 10 years, has deterred lawmakers from enacting anything other than short-term postponements of scheduled reductions going back to 2003.

These cuts have added up to $290 billion worth of "SGR bad debt," the 110 medical societies said in a letter yesterday to Rep. Dave Camp (R-MI), chair of the House Ways and Means Committee. The medical societies described this bad debt as a "budget gimmick," because Congress will never allow a catastrophic physician pay cut to go through. Meanwhile, future savings from the scheduled pay cut remain on the books, masking "the real deficit and debt."

Using money allocated but no longer needed for Overseas Contingency Operations (OCO), a budget line for the Iraq and Afghanistan wars, would help fund a permanent "doc fix" to the Medicare reimbursement crisis, according to the medical societies.

"Using the OCO baseline as an offset for the accumulated SGR bad debt amounts to 'cleaning the books' by eliminating one flawed budget gimmick with another," they write.

Signatories to the letter in addition to the AMA include the American Academy of Family Physicians, the American College of Physicians, the American College of Surgeons, the American College of Cardiology, the American Congress of Obstetricians and Gynecologists, the American Osteopathic Association, and the Medical Group Management Association. Also on the list are medical societies representing every state except Alaska, Indiana, Louisiana, and Utah.

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