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SGR still around, additional Medicare cuts possible in debt deal

No amount of urging and prodding from an enormous number of physicians and their associations could persuade Congress and President Obama to use the bipartisan debt deal to repeal the controversial Medicare Sustainable Growth Rate (SGR) formula.

And the plan that actually was signed into law could mean even more Medicare reimbursement cuts for physicians.

The American Academy of Family Physicians (AAFP) made a final pitch just before the bill was signed into law. It called the SGR formula, which currently mandates a 30% Medicare cut for physicians in 2012 unless Congress intervenes, “deeply flawed.” The AAFP warned that failure to move away from the SGR formula would force many primary care physicians to shutter their practices because they already operate on such tight margins.

“Data from a 2010 AAFP survey show that a 25% Medicare pay cut—5% less than what is required on Jan. 1, 2012—would drive 13% of family physicians out of business,” according to Roland Goertz, MD, MBA, AAFP’s president.

In that situation, seven out of every 10 family physicians will be forced to limit the Medicare patients they accept, and 62% will be forced to turn away new Medicare patients, Goertz added.

The White House has pointed out repeatedly that patients are protected from the cuts in the debt deal, which, at least in the short term, lessens the threats of raising the age of eligibility or increased fees for higher-income beneficiaries. Left unspoken by debt deal proponents, however, is that patients will be affected if fewer physicians accept Medicare patients, which is likely to occur if all of the cuts are on the provider side.

While Medicare and Medicaid are somewhat protected in a first round of $917 billion in discretionary spending reductions, that could change in the second round of funding cuts, according to the new legislation.

The “super committee” appointed under the deal is charged with finding at least $1.2 trillion in additional spending reductions by November 23. If Congress does not agree to the committee’s recommendations, a trigger in the law automatically will guarantee the savings through cuts in defense and other federal spending, including an up to 2% reduction in Medicare payments beginning in 2013. That trigger would not affect Medicaid funding. It is not clear whether those cuts will be on top of the SGR.

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