Statement of the American College of Obstetricians and Gynecologists

The American College of Obstetricians and Gynecologists (ACOG), an organization representing nearly 45,000 physicians dedicated to improving women’s health, strongly urges Congress to repeal the 5.4% cut in Medicare payment and to replace the current, flawed Medicare payment formula.

The Medicare Physician Payment Fairness Act of 2001 (S 1707 and HR 3351) enjoys a supermajority in both Houses, with over 300 co-sponsors in the House and 69 in the Senate pledging their support.  Yet, in 2001, no floor action occurred to prevent the 5.4% cut from going into effect January 1, 2002.  This legislation is the critical first step in solving the inherent problems in the annual Medicare Physician Payment updates. 

The 5.4% cut implemented by the Centers for Medicare and Medicaid Services (CMS) stems from a fatally-flawed formula that penalizes physicians for economic downturns and from CMS data errors that have short-changed physicians by $15 billion since 1998 and 1999.  Services provided by physicians are subject to an aggregate Medicare spending limit that does not include any adjustment for new technology and that is tied to the gross domestic product. 

This cut is the fourth broad-scale reduction in physicians’ fees since 1992, bringing the average increase in Medicare fees between 1991 and 2002 to just 1.1% a year—13% less than the government’s estimate of practice cost inflation.  This cut is especially hard on ob-gyns, whose professional liability premiums have skyrocketed in the last six months.  Ob-gyns face these increases, combined with decreases in federal payments and expanding regulatory burdens.

Medicaid and private payers often base their payments on the Medicare payment update as well.  Medicare beneficiaries make up 13% of ACOG Fellows’ patients.  Twenty percent of their patients are Medicaid beneficiaries.   Already, compromises in access to care have been reported in Atlanta, Phoenix, Albuquerque, Annapolis, Denver, Austin, Spokane, northern California, and Idaho.  We cannot allow this to continue.

The Medicare Physician Payment Fairness Act would provide an immediate legislative halt to the 5.4% Medicare Payment cut, and give Congress the opportunity to make systemic changes in the physician update system next year.  In addition, it would direct the Medicare Payment Advisory Commission (MedPAC) to recommend ways to eliminate or fix the expenditure target or Sustainable Growth Rate (SGR), which now helps determine annual Medicare Physician Payment updates.

ACOG urges Congress to act today to restore fair payments to physicians and ensure patients’ access to quality care.