Lobbying CMS to Make Administrative Changes to the Sustainable Growth Rate SGR Formula for Updating the Medicare Physician Fee Schedule

July 14, 2004

The Honorable Mark McClellan, M.D., Ph.D. Administrator

Centers for Medicare & Medicaid Services 200 Independence Avenue, SW Room 314-G Washington, DC 20201

Dear Dr. McClellan:

All of the undersigned organizations believe that Medicare's formula for paying physicians and other health professionals is broken. Beginning in 2006, the Sustainable Growth Rate (SGR), which is part of this formula, will cut reimbursements by five percent a year for seven consecutive years, with additional cuts for several years thereafter. Without changes, 2014 payment levels for these practitioners are projected to be about 30 percent less than in 2005. Such an enormous reduction defies logic and would be debilitating for medical practices.

We appreciate that you have spoken positively about the need to correct this situation before it greatly impedes beneficiary access to high quality care. Although a complete solution likely will require congressional action, there are a number of steps that CMS could take administratively to improve the current formula and facilitate legislation in this area. In particular, we believe that it is within your authority to remove physician-administered drugs from the SGR calculation and include the full costs of new benefits and coverage decisions in the SGR target.

Removal of the Cost of Prescription Drugs

Congress intended the SGR to account for Medicare spending on physician/practitioner services. However, even though drugs are products and not "physician services" as defined in the law, the Centers for Medicare & Medicaid Services (CMS) includes the cost of drugs in the SGR. Due to increasing technology and growing demand, spending on these drugs is rising far more rapidly than spending on physicians' and other practitioners' services. Combining the two creates an inaccurate picture of growth in services. Removing drugs from the SGR formula thus is a logical step towards improving the accuracy of the current formula.

Inclusion of the Full Impact of Law and Regulations

The current SGR calculation fails to adequately capture the impact of changes to laws and regulations. For example, although Medicare has new screening benefits, the SGR targets do not appear to account for the downstream services that result when screenings reveal health problems. The same is true of the Medicare prescription drug benefit, which will unquestionably lead to more medical visits, thus generating additional tests and care. The SGR calculations also need to account for this inevitable spending. Additionally, the impact of CMS coverage decisions is excluded from the SGR entirely, even though those decisions significantly influence patient demand. Such changes in law and regulation are likely very beneficial for patient care, but inappropriately result in negative payment updates through the SGR calculation.

These suggested adjustments represent clear and decisive steps in the right direction, even if they will not solve all of the problems associated with

Medicare's reimbursement formula. We urge you to make these improvements now in order to facilitate congressional efforts to reform this broken system before 2006. Please let us know how we can assist, and thank you for your continuing efforts to ensure beneficiary access to high quality care.


American Academy of Audiology American Academy of Child and Adolescent Psychiatry

American Academy of Dermatology Association American Academy of Facial, Plastic and

Reconstructive Surgery American Academy of Family Physicians American Academy of Neurology American Academy of Nurse Practitioners American Academy of Ophthalmology American Academy of Otolaryngology—Head and Neck Surgery American Academy of Pediatrics American Academy of Physical Medicine and

Rehabilitation American Academy of Physician Assistants American Academy of Sleep Medicine American Association for Thoracic Surgery American Association of Clinical Endocrinologists American Association of Clinical Urologists American Association of Electrodiagnostic Medicine

American Association of Neurological Surgeons American Association of Nurse Anesthetists American Association of Orthopaedic Surgeons American College of Cardiology American College of Chest Physicians American College of Emergency Physicians American College of Gastroenterology American College of Nurse-Midwives American College of Nurse Practitioners American College of Obstetricians and

Gynecologists American College of Osteopathic Family Physicians

American College of Osteopathic Surgeons American College of Physicians American College of Radiology Association American College of Rheumatology American College of Surgeons American Gastroenterological Association American Geriatrics Society American Medical Association American Medical Directors Association American Medical Group Association American Nurses Association American Occupational Therapy Association American Optometric Association American Osteopathic Academy of Orthopedics American Osteopathic Association American Physical Therapy Association American Podiatric Medical Association American Psychiatric Association

American Psychological Association American Society for Clinical Pathology American Society for Gastrointestinal Endoscopy American Society for Reproductive Medicine American Society for Therapeutic Radiology and Oncology

American Society of Addiction Medicine American Society of Anesthesiologists American Society of Cataract and Refractive Surgery

American Society of Clinical Oncology American Society of General Surgeons American Society of Hematology American Society of Nephrology American Society of Neuroradiology American Society of Plastic Surgeons American Speech-Language-Hearing Association American Thoracic Society American Urogynecologic Society American Urological Association Association of American Medical Colleges Association of Women's Health, Obstetric and

Neonatal Nurses Cleveland Clinic Foundation College of American Pathologists Congress of Neurological Surgeons Emergency Department Practice Management

Association Heart Rhythm Society Infectious Diseases Society of America Joint Council of Allergy, Asthma and Immunology Marshfield Clinic Mayo Clinic

Medical Group Management Association National Association for Medical Direction of

Respiratory Care National Association of Social Workers National Medical Association National Organization of Nurse Practitioner

Faculties National Rural Health Association North American Spine Society Renal Physicians Association Society for Cardiovascular Angiography and

Interventions Society for Vascular Surgery Society of Critical Care Medicine Society of General Internal Medicine Society of Gynecologic Oncologists Society of Hospital Medicine Society of Interventional Radiology Society of Thoracic Surgeons The Endocrine Society

SOURCE: American College of Physicians (ACP). 2004. [Online information; retrieved 6/16/05.] http://acponline.org/hpp/mcclellan04.htm. Reprinted with permission of ACP.

The degree of influence lobbyists exert on agenda setting and other aspects of policymaking is facilitated by several well-recognized sources of their influence with policymakers (Ornstein and Elder 1978; Herrnson, Shaiko, and Wilcox 2004).

• Lobbyists are an important source of information for policymakers. Although most policymakers must be concerned with many policy issues simultaneously, most lobbyists can focus and specialize. They can become expert, and can draw on the insight of other experts, in the areas they represent.

• Lobbyists can assist policymakers with the development and execution of political strategy. Lobbyists typically are politically savvy and can provide what amounts to free consulting to the policymakers they choose to assist.

• Lobbyists can assist elected policymakers in their reelection efforts. (More is said about this in the next section, on electioneering.) This assistance can take several forms, including campaign contributions, votes, and workers for campaigns.

• Lobbyists can be important sources of innovative ideas for policymakers. Policymakers are judged on the quality of their ideas as well as on their abilities to have those ideas translated into effective policies. For most policymakers, few gifts are as valued as a really good idea, especially when they can turn that idea into a bill that bears their name.

• Finally, lobbyists can be friends with policymakers. Lobbyists often are gregarious and interesting people in their own right. They entertain, sometimes lavishly, and they are socially engaging. Many of them have social and educational backgrounds similar to those of policymakers. In fact, many lobbyists have been policymakers earlier in their career. It is neither unusual nor surprising for lobbyists and policymakers to become friends.

The effective use of the electioneering tactic in influencing the policymaking Electioneering process is based on the simple fact that policymakers who are sympathetic to a group's interests are far more likely to be influenced than are policymakers who are not sympathetic. Thus, interest groups seek to help elect to office— and help keep in office—policymakers whom they view as sympathetic to the interests of the group's members. Electioneering, or using the resources at their disposal to aid candidates for political office, is a common means through which interest groups seek to exert their influence on the policymaking process. Many groups have considerable resources to devote to this tactic.

Interest groups have, to varying degrees, a set ofresources that involve electoral advantages or disadvantages for political candidates. "Some groups— because oftheir geographical dispersion in congressional districts throughout


Money Raised in the 2004 Election Cycle


Money Raised in the 2004 Election Cycle


No. of

Total Cash


Total from



Total Raised

Total Spent

on Hand

from PACs
























No. of Total Cash Total Total from

Party Candidates Total Raised Total Spent on Hand from PACs Individuals

No. of Total Cash Total Total from

Party Candidates Total Raised Total Spent on Hand from PACs Individuals

All 188 $486,254,101 $481,262,666 $63,333,320 $68,217,656 $324,584,361

Democrats 77 $247,164,203 $247,202,890 $33,932,648 $30,670,459 $169,165,050

Republicans 93 $237,745,629 $233,406,918 $28,715,110 $37,531,645 $154,971,547


No. of Total Cash Total Total from

Party Candidates Total Raised Total Spent on Hand from PACs Individuals

All 15 $863,046,722 $810,972,725 $49,847,980 $3,688,379 $627,494,380

Democrats 10 $489,873,804 $465,241,779 $25,078,825 $782,112 $351,768,911

Republicans 1 $366,554,535 $339,280,603 $24,595,515 $2,903,767 $271,634,244

SOURCE: Center for Responsive Politics (2005). Reprinted with permission.

the country; their ability to mobilize their members and sympathizers; and their numbers, status, or wealth—are thought to have an ability to affect election outcomes" (Kingdon 1995, 51).

One of the most visible aspects of the electioneering tactic is the channeling of money into campaign finances. Table 5.1 shows the extent of this activity in the 2004 election cycle. Health-related interest groups participate heavily in this form of electioneering.

In 1975 Congress created the Federal Election Commission (FEC) (www.fec.gov) to administer and enforce the Federal Election Campaign Act (FECA)—the law that governs the financing of federal elections. The duties of FEC, which is an independent regulatory agency, are to disclose campaign finance information, enforce the provisions of the law such as the limits and prohibitions on contributions, and oversee the public funding of presidential elections. The Real World of Health Policy: Types of Groups Involved in Financing Political Campaigns describes groups permitted to engage in political activity.

Was this article helpful?

0 0
Fitness Wellness For You

Fitness Wellness For You

Achieve the Fitness and Wellness for You that you have always wanted by learning the facts so you can take the right steps to maximize your health. Learn How to Achieve Real Fitness and Wellness for a Healthy Body, Mind and Spirit to Improve Your Quality of Life in Today's World. Receive Valuable Information to Discover What Really Matters and What Actually Works in Finding Genuine Wholeness for All Aspects of Your Being.

Get My Free Ebook


  • zahra
    How to lobby for changes in cms fee schedule?
    7 years ago

Post a comment