College of American Pathologists
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  President’s Desk


cap today



December 2006
Ask today for a freeze on the SGR cut

Thomas M. Sodeman, MD

On Nov. 1, the Centers for Medicare and Medicaid Services published the final rule setting Medicare rates and policies on physician payment for 2007. The following Tuesday, midterm elections shifted the balance of power in both houses of Congress, reconfiguring the chessboard. What impact that shift will have on the future of pathology and physician payment is unknown, but with your help we can keep health care issues front and center in Congress and potentially soften the blow that was handed to pathology in CMS’ rule that results in an 11 percent cut to our specialty.

Though the rule is final, it is Congress that has the power to reform Medicare’s flawed sustainable growth rate, or SGR, formula that is responsible for five percent of the 11 percent overall cut. Without a solution, this won’t be the last cut; payments are scheduled to be cut by 37 percent over the next nine years based on the SGR. With these projections, Medicare could indeed implode if physicians can no longer afford to participate in the program. This powerful message alone should and has captured Congress’ attention, but we need to do more to continue to make our voices heard.

The 110th United States Congress will be sworn in on Jan. 3, 2007. At this writing, a few races remain in contention, but at least 35 new legislators will be joining the incumbents. New committee chairs will have to catch up on their reading, and new legislators will have to become acclimated.

There is abundant distraction for even experienced legislators when a new Congress convenes. There will be a lot of jostling to establish priorities in Washington in the early weeks of 2007, making it difficult for constituents and organizations like ours to compete for a lawmaker’s attention. As part of the total health care system that will represent 33 percent of the gross domestic product by 2020, we need to be among the clearer and more persistent voices. It should be everyone’s concern, and because health care is a nonpartisan issue, it is unlikely to drop down on the list of priorities in the 110th Congress.

A reconfigured Congress should challenge prevalent assumptions, such as the belief that the country simply has no more money and therefore can no longer afford fair payment to physicians who care for Medicare patients. A new Congress should see the budget with fresh eyes—and we hope fully informed legislators will find a way to find the money.

Fully informed is where you come in, and when you come in is right now.

As I write this, the 109th Congress is in lame duck session. Our hope is that legislators will freeze the five percent cut based on the SGR before year-end adjournment. The next best short-term outcome would be passage of a continuing resolution to place the cut on the agenda for January. But whatever the status when you read this, it is critical that you contact your members of Congress now and urge their support to stop the cut.

It is unlikely that anyone on either side of the aisle is opposed to fixing the SGR because, if not repaired or replaced, it is destined to strangle access to care. The SGR is a concrete, direct, and immediate threat to the millions who now rely on Medicare. The key problem is that any fix requires diverting resources and, in some cases, Medicare beneficiaries can be asked to pay for some of those increases, which is often a tough political “sell.”

Effective grassroots advocacy should focus on a limited number of key messages:

  • Congress must place an immediate freeze on the SGR. If it does not, Medicare payments to physicians will be cut by five percent on Jan. 1, 2007. Already, since 2000, physician fees have declined 5.5 percent, while the cost of living has increased 14 percent. Further cuts could be financially devastating to many physicians.
  • The SGR formula that the CMS uses to set annual physician payment updates under Medicare is fundamentally flawed and must be overhauled in the longer term.
  • The Medicare economic index, or MEI, an accurate benchmark for physician input costs, is one component of the SGR formula. For more than 30 years, the CMS used the MEI alone to benchmark medical practice costs. We should return to that method.
  • Without a fix, the SGR is scheduled to cut reimbursement by another 37 percent between 2007 and 2015. Conversely, if the SGR were tied to the MEI, reimbursement rates would more adequately keep pace with physicians’ costs of labor and material and would actually increase 22 percent over the same period.

The College is also extremely concerned about other aspects of the Nov. 1 final rule, which impose an additional six percent in cuts to pathologists for Medicare services. While we cannot reverse five percent of this cut due to the decision to pay for E&M services (primary care physician codes) out of reductions in work relative value units, we still have a chance to influence how they are going to change the practice expense methodology, which is expected to be phased in over the next four years. Other major payment-related advocacy goals include permanent grandfathering of the CMS provision that permits Medicare reimbursement, under certain conditions, to independent laboratories that provide technical component services to hospital inpatients and outpatients.

Our initial focus, however, is the SGR. The easiest way to contact your legislator and ask for his or her support is via the American Medical Association grassroots hotline at 800-833-6354. Press 1 to call Congress and enter your Zip code to be connected to your legislator’s office. Your message should be brief, specific, and concrete. State a few salient facts, then offer to explain, at his or her convenience, why this is so important. Conclude with your name, address, e-mail, and telephone number. Make a note in your calendar to follow up in a week or two, and continue to follow up with a few more facts until you feel you’ve been heard. Then follow up again.

They say the way you catch a big fish is to chase it until it’s worn out. There are 535 legislators and 16,000 of us. We can do this.

Dr. Sodeman welcomes communication from CAP members. Send your letters to him at