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Peter W. Carmel, MD, AMA Presidential Address

Nov. 12, 2011

AMA Interim Meeting
Hilton New Orleans, Riverside
New Orleans, La.

Peter W. Carmel, MD
American Medical Association

Mister Speaker, members of the Board of Trustees, delegates, friends. It is a great honor to address you this afternoon.

Six years ago, outside these walls, Hurricane Katrina unleashed her fury on the city of New Orleans. And the nation watched in horror as the floodwaters rose, engulfing everything in their path. The images from that time have been seared in our memories. Families stranded on rooftops. Homes demolished. Thousands of displaced residents, clinging to life beneath the baking summer sun.

Some of the most poignant images came from Charity and University Hospitals, the two teaching hospitals of New Orleans. Cut off from outside support for days, physicians and staff fought to keep patients alive. They transported them to higher ground. They manually pumped ventilators. When the power failed and food was lacking, they improvised. And they did not quit – they did not leave – until every last patient had been evacuated.

Colleagues, five months ago I told you that my heroes have always been doctors. To say the brave physicians of Louisiana are among them is an understatement. They are super-heroes.

But it's not just because of their extraordinary response to Katrina. Earlier this week I spoke at LSU medical school, whose simulation lab was destroyed during the flood. The physicians there refused to give up. Determined to rebuild, they reached out to their alumni, applied for a federal grant, and used the funds to create one of the most advanced simulation labs I've ever seen.

Computerized patient models can be programmed to mimic everything from heart beats to breathing to pupillary reflexes. They can even simulate the haptics, the feeling, of inserting a needle – first the resistance of the vein, then the "pop" when the needle passes through the wall. Through simulation, medical students can gain hands-on experience years ahead of schedule. And residents can master difficult procedures, such as endoscopic operations. Best of all, there is no risk to patients.

This is just one example of how physicians across the nation are shaping the future of health care in their communities. During my travels I have encountered countless others . . .from West Bloomfield, Michigan, where physicians at Henry Ford are creating the hospital of the future – to the University of Texas, where a unique program has been developed to care for the underserved. Medical students and residents rotate through practices up and down the Rio Grande. They develop an interest in primary care, and they tend to stay in Texas after they graduate.

While some would have you believe the future of American medicine no longer resides with doctors – that it has been transferred to politicians and bureaucrats – these physicians are proving otherwise. In the midst of changing needs and challenging times, they're responding with creativity, passion and vision.

During the past five months the AMA has also done its part to shape the future of health care. And we've achieved some important victories. If you recall, a year ago a magic phrase emerged in health care circles. I want you to be very quiet. You'll hear the heavenly choirs when I say the words…Accountable Care Organizations. And the heavenly choirs said, "Amen."

Politicians and industry analysts heralded ACOs as the wave of the future – a way to shift the focus from volume of service to quality of service. But when CMS released its proposed rules on March 30th, physicians grew disheartened. The startup costs were enormous. The requirements for participation were excessive. And physicians could not share in any of the savings generated until a threshold had been met. Yet they were more than welcome to share in any losses incurred.

The AMA's response was swift and effective. We turned to all of you – the representatives of our state and specialty societies – for counsel and support. And you responded en masse.

The reward for our efforts came three weeks ago – on October 20th – with the release of the final rules on ACOs. Many of the AMA's recommendations have been adopted. Among them, participating physicians can now share in the first dollar of savings generated, without meeting a threshold. A new option has been added that will shield physicians from financial risk during the contract period. The number of required quality measures has been cut in half. And groups of physicians can now form ACOs without the participation of a hospital.

Our call for funding this effort was also answered. The Center for Medicare and Medicaid Innovation will provide $170 million in advance payments to help physicians – including those in small practices – develop the infrastructure to form ACOs.

Today, due to our efforts, ACOs will be a viable option for many physicians. In conjunction with the other models being tested in Medicare, they hold promise for an exciting new era of healthcare delivery.

And this is just one of the AMA's recent victories on behalf of the profession of medicine. An example of the profound impact physicians can have when we stand together. Here within these walls, 175 state, specialty and sub-specialty societies are represented. Collectively, we speak for some 680,000 physicians. That's quite a voice. A commanding voice for change.

Today, the need to use that voice is greater than ever. On January 1st the universally derided Sustainable Growth Rate formula once again calls for cuts to Medicare payment. This time 27.4 percent. Here in Louisiana that equates to a loss of $320 million for the care of elderly and disabled patients – an average cut of $31,000 for each physician in the state.

Now obviously we have been threatened with steep SGR cuts before. Many times. But this time the conversation is different. In August, the nation's contentious debate over raising the debt ceiling culminated in passage of the Budget Control Act. And a complicated deficit reduction process was set in motion that poses great risks for physicians, as well as great opportunities. Let me explain.

The Budget Control Act tasks a 12-member Joint Select Committee on Deficit Reduction, or "Super Committee," with identifying at least $1.2 trillion in deficit reduction measures. And their deadline is November 23rd, just 11 days from now. Within a month after that, Congress will conduct an up or down vote on their proposal. And the results will be immune from amendment or filibuster.

There are several possible outcomes of this process. In a best case scenario, the Super Committee recommends SGR repeal as part of their proposal and Congress votes to support it. If that happens, we can all breathe a sigh of relief.

Scenario two: The Super Committee proposal passes, but does not eliminate the SGR. That would leave just seven days to prevent a 27 percent cut. Not good.

Scenario three: Should the Super Committee fail to meet either its deadline or savings target – or, should Congress vote their recommendations down – then a broad package of automatic cuts will be triggered. This "meat-cleaver" approach includes a two percent cut for all Medicare providers, beginning in 2013. For physicians, that would be on top of any SGR cuts that arise during the ensuing years. So that takes us from bad, to worse.

Of these options, the AMA clearly endorses the first – repealing SGR once and for all. And we're doing everything in our power to make that happen. Now I know what you're thinking. If the government's goal is to reduce the deficit, how can we possibly hope to win $300 billion in additional spending? But there are several reasons why fixing SGR now makes not only ethical, but fiscal sense.

First, widespread concern over the nation's burgeoning debt has led to a demand for honest, straightforward budgeting. Yet as we all know, Congress has been anything but honest when it comes to Medicare financing. Senator Pat Toomey of Pennsylvania said it best. "Every year, Congress pretends that doctors will take a massive pay cut next year in order to artificially deflate the cost of Medicare and make future deficits appear smaller." To put it simply, Congress has kept the SGR deficit "off the books" for years.

Second, delaying an SGR fix will only exacerbate the nation's debt crisis in the long run. In 2005, eliminating SGR would have cost $48 billion. Today, it's estimated at $300 billion. And if the government delays until 2016, the cost will soar to $600 billion. It is impossible for the nation to climb out of its financial hole, if we do not address the broken Medicare system now.

Third, a clear precedent for SGR reform in the context of deficit reduction exists. Numerous groups – from the bipartisan "Gang of Six" senators, to the Simpson Bowles Commission – have created proposals that reduce the deficit by trillions of dollars, and simultaneously eliminate the SGR. The Super Committee is well aware of these proposals. They know it can be done. Now they need to step up to the plate and make it happen.

And finally, a nearly 30% SGR cut would jeopardize the care of our nation's elderly, disabled, and military family members. Already, one in four seniors seeking a new primary care physician under Medicare has difficulty finding one. Just imagine the chaos that would ensue if doctors across the nation were forced to stop seeing Medicare recipients. It is simply unthinkable, unconscionable, that the government should choose to leave our nation's most deserving citizens out in the cold.

Now I don't know about you, but these arguments seem pretty straightforward to me. But then I'm a doctor, not a politician. In order to ensure Congress gets the message, the AMA has launched an aggressive campaign to repeal SGR as part of the deficit reduction process. We sent a joint letter to the Super Committee, held meetings with targeted Congressional offices, and launched a multi-million dollar advertising campaign. We secured 113 bipartisan signatures on a Congressional" letter to the Super Committee. And we coordinated intensive physician and patient grassroots campaigns, generating approximately 200,000 contacts to Congress.

I have some good news for you. Our message appears to be getting through. The latest word from Capitol Hill is that Congressmen are starting to complain about their phones ringing off the hooks. So let's keep the pressure on. Remember, every voice counts. If you haven't done so already, use the AMA grassroots hotline to tell your legislators that eliminating SGR – NOW – is the only fiscally responsible choice.

As I alluded to earlier, SGR repeal is not the only opportunity before us today. Given the intense focus on fiscal responsibility, the AMA has also renewed our demand for medical liability reform.

Implementing comprehensive reforms, including limits on non-economic damages, would reduce the federal budget deficit by $62.4 billion over 10 years.  That's not my number. That comes from the Congressional Budget Office. In this economy – in any economy – we can't afford to waste billions of dollars on defensive medicine. Congress needs to fix the broken liability system – either as part of the Super Committee package or by taking action on H.R. 5, the HEALTH Act, which currently awaits a vote on the House floor.

Given the risks and opportunities I've just described, you can see why the AMA has launched a "full court press" on the Super Committee. Now let me be clear. We also continue to address an array of equally important priorities, from repealing the Independent Payment Advisory Board to lifting the caps on Medicare-supported graduate medical education slots. And we will not rest until these and other critical goals are achieved.

But right now, as we speak, 12 individuals over on Capitol Hill are weighing decisions that will change the future – not just for those of us in this room, but for millions of patients across the nation. The issues at stake are familiar – SGR, MLR – challenges that have plagued us for years. And it is easy, in the midst of familiar challenges, to grow fatigued. But we need to stick with it . . .

Let me tell you about Larry. Lawrence Matusoff was born in Brooklyn in 1928. When he turned 18 he enlisted in the army, and for two years he proudly served his country as a paratrooper. In 1948 Larry returned to Brooklyn, where he spent the next 20 years working for Schlitz Brewing Company. He married and had two kids.

When the Schlitz plant closed in the 70s, Larry embarked on a series of entrepreneurial ventures, remaining proudly self-employed for the next 30 years. But when the market for Larry's most recent venture – a limousine service – dried up in 2009, he was forced to take a company job. Unfortunately, that company also suffered due to the economy. And in May, Larry was let go.

Today he and his wife rely on social security to make ends meet. And at 82 years old, Larry has reentered the job market. Two months ago he submitted his profile to a talent agency, and one month ago he received his first assignment. Here it is.

[AMA ad featuring Larry played here ]

Larry is the face of the AMA's campaign to repeal SGR. He has relied on Medicare for 17 years, and can't imagine what he would do without it. His wife Anne also relies on Medicare in her battle against diabetes, hypertension and high cholesterol.

Larry and Anne are just two of millions. Two of the 48 million Americans on Medicare. And almost 10 million more on TRICARE. These millions – some of our nation's most deserving citizens – need doctors. And in the midst of the government's ongoing threats to undermine the Medicare system, they need more than that. They need heroes. Individuals willing to stand up, speak out, and fight for their needs. My fellow AMA members, my fellow physicians. Our patients need heroes. So heroes we must be. Thank you . . . the heroes of American medicine.