AMA Wire

Wednesday, June 6, 2012

This Week's News

AMA recommends alternative models to solve Medicare payment problem

AMA recommends alternative models to solve Medicare payment problem

Various different payment approaches could serve as viable alternatives to Medicare's flawed sustainable growth rate (SGR) formula and offer a way forward for the Medicare payment system, the AMA outlined recently in a letter to Congress.

Responding to a request from the U.S. House of Representatives' Committee on Ways and Means, the AMA recommended a multipronged approach to reform Medicare's broken payment system. Eliminating the SGR would be the first step, followed by a five-year transition period, during which physicians could experiment with payment and delivery innovations that improve patient care while lowering overall health care costs. After this testing period, Medicare would phase in a range of alternatives to the traditional fee-for-service payment model.

The AMA urged Congress to ensure that the Centers for Medicare & Medicaid Services (CMS) has sufficient funding to engage in testing efforts and underscored the importance of permitting physicians to choose from a variety of innovations. Among the possibilities identified in the letter are shared savings arrangements, accountable care organizations, bundled payments, performance-based payments, global and condition-specific payment systems, warranties for care and medical homes.

The AMA is calling for a similarly broad menu of options following the transition period.

"The new system should not be one-size fits-all; physicians should be able to select from the innovations that work to determine the best fit for their practices," AMA President Peter W. Carmel wrote in a recent column in Medicare Newsgroup. "This is the way to move from a system that has failed to one that will provide long-term stability for the Medicare program and for physicians and the patients they serve."

Under the current SGR-based payment system, physicians face a payment cut of nearly 30 percent on Jan. 1. Physician payments have remained essentially frozen over the last decade, while the cost to care for patients has increased by more than 20 percent.