Medicare Payments Face Another 6.1% Cut Under SGR

Janice Simmons, June 28, 2010

In a new proposed rule, the Centers for Medicare and Medicaid Services (CMS) has included a provision that could mean an additional reduction by 6.1% in physician service payment rates starting Jan. 1 2011, under the sustainable growth rate (SGR) formula adopted by Congress. This reduction would be added to a projected 23.5% cut that is scheduled to take effect Dec. 1 --unless Congress works to change or eliminate the current SGR formula.

The SGR formula has called for an across the board reduction in physician payment rates every year since 2002, and since 2003, through May 31, 2010, the cuts have been averted by legislative action. Last week, after a sustained battle, Congress finally approved -- and President Obama signed into law on June 25 -- a provision postponing the SGR through Nov. 30. The reduction called for the SGR (21.3%) -- plus an increase in physician rates approved by Congress (2.2%) -- would essentially create a 23.5% decrease in reimbursements if Congress fails to act after Dec. 1.

CMS, though, has expressed its reluctance about the proposed cuts to the Medicare physician fee schedule. "We are very concerned about the impact the continuing uncertainty about payment rates and cash flow disruptions may have on physician practices and on beneficiary access to physicians' services," said Jonathan Blum, deputy administrator and director of CMS's Center for Medicare.

He added that while 97% of physicians have chosen to participate in Medicare for 2010 -- and have agreed to accept Medicare's payment rates as payment in full for the services they provide to beneficiaries -- CMS is hearing more stories of physicians limiting the number of beneficiaries they will see. "We are also concerned about the diversion of scarce Medicare resources as we have to adjust our payment operations to the constantly changing legislative landscape."

The CMS proposed rule also calls for implementing provisions of the healthcare reform act that would eliminate out of pocket costs for beneficiaries for most preventive services--including the new annual wellness visit. This visit augments the benefits of the initial preventive physical examination (IPPE) -- or the "Welcome to Medicare Visit" -- with an annual wellness visit.

This provision is designed to allow physicians and patients to develop a personalized prevention plan. The law will require the annual wellness visit to include at least the following six elements:


  • Establish or update the individual's medical and family history.
  • List the individual's current medical providers and suppliers and all prescribed medications.
  • Record measurements of height, weight, body mass index, blood pressure, and other routine measurements.
  • Detect any cognitive impairment.
  • Establish a screening schedule for the next 5 to 10 years including screenings appropriate for the general population, and any additional screenings that may be appropriate because of the individual patient's risk factors.
  • Furnish personal health advice and coordinate appropriate referrals and health education.


Janice Simmons Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at
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