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American College of Physicians

February 10, 2011

The American College of Physicians (ACP) is pleased to submit the following statement for the record of the above referenced hearing. ACP is the largest medical specialty organization and the second-largest physician group in the United States. ACP members include 130,000 internal medicine specialists (internists), related subspecialists, and medical students. Internists specialize in the prevention, detection, and treatment of illness in adults. Our membership includes physicians who provide comprehensive primary and subspecialty care to tens of millions of patients, including taking care of more Medicare patients than any other physician specialty.

ACP appreciates the Committee’s interest in the effect of the Affordable Care Act (ACA) on the Medicare program and its beneficiaries. The College believes that this legislation contains important and essential provisions to begin to address America’s severe shortage of primary care physicians for adult patients, improve benefits for preventive services, empower patients and physicians to make patient care decisions based on the best evidence of clinical effectiveness, and extend the solvency of the Medicare Part A Trust Fund. We also recognize that the legislation can and should be improved, and we urge the Committee to seek bipartisan common ground on a plan to permanently repeal the Sustainable Growth Rate (SGR) formula, to further support the value of primary care in Medicare payments, and to initiate reforms to make the costs and financing of the program sustainable over both the short—and long—term while reducing the federal budget deficit.

Our statement will particularly focus on the continued need for payment and delivery system reforms to support the value of care provided by primary care physicians. The ACA supports this goal by beginning to reform payment and delivery systems. Other provisions of the law, not under the jurisdiction of this committee, will fund training programs that have a proven record of producing more primary care physicians who practice in areas of the country with the greatest need. Given the major role played by the Medicare program in financing care for America’s senior and disabled citizens and the fact that so many other payers follow Medicare’s lead, the Medicare payment reforms initiated by the ACA are of particular significance to the program and its beneficiaries.

Why Is It So Important to Address the Shortage in the Delivery of Primary Care?

Investment in primary care is essential to achieving a high performing, efficient and effective health care system. An ACP analysis of over 100 annotated research studies shows that the availability of primary care physicians in a community is positively associated with better outcomes and lower costs of care.

Yet the United States is facing a growing shortage of physicians in key specialties, most notably in general internal medicine and family medicine—the specialties that provide primary care to most adult and adolescent patients. A recent peer-reviewed study projects that there will be a shortage of up to 44,000 primary care physicians for adults, even before the increased demand for health care services that will result from near universal coverage is taken into account. A case in point is the Commonwealth of Massachusetts. While the state has been able to achieve coverage for nearly all of its residents, shortages of primary care physicians have led to long waits for appointments.

The looming primary care physician shortage stems from the fact that the demand for primary care in the United States is expected to grow at a rapid rate while the nation’s supply of primary care physicians for adults is dwindling and interest by U.S. medical school graduates in pursuing careers in primary care specialties is steadily declining. Primary care physicians provide 52% of all ambulatory care visits, 80% of patient visits for hypertension, and 69% of visits for both chronic obstructive pulmonary disease and diabetes, yet they comprise only one-third of the U.S. physician workforce, and if current trends continue, fewer than one out of five physicians will be in an adult primary care specialty.

With the aging of the U.S. population, a greater proportion of our citizens are enrolled in the Medicare program. Older Americans—with increasing incidences of chronic diseases—are especially disadvantaged by the shortage of primary care physicians to care for them.

Even with the ACA’s policies that are beginning to address the crisis in primary care, the United States will likely continue to face a shortage of primary care physicians for adults, as well as shortages in other critical physician specialties, but this shortage will be much more severe if the ACA’s policies to reform payment and delivery systems and to ensure adequate workforce capacity are under-funded or repealed.

The following ACA provisions help address this crisis in primary care and further contribute to the delivery of higher quality, more effective and efficient care to our Medicare and, in some cases, Medicaid beneficiaries and enrollees in private insurance plans. The College strongly supports the continued implementation and funding of these provisions.

I.                   Payment and Delivery System Reforms

Primary Care Incentive Program

This program begins to address inequities in payments for primary care by providing a 10 percent bonus payment, in addition to the usual Medicare fee schedule amount, for designated primary care services provided by internists, family physicians, geriatricians and pediatricians. In order to qualify for the bonus, at least 60 percent of Medicare allowed charges of these physicians must consist of the designated primary care services: office, nursing facility, domiciliary, and home services. The bonus program took effect on January 1, 2011 and will continue through 2015.

This important ACA provision begins to address disparities in payments that are major barriers to physicians entering and remaining in primary care specialties.  A new report by the Council on Graduate Medical Education recommends that compensation to primary care physicians be increased to 70 percent of the average payment for other physician specialties in order to train and retain a sufficient supply of primary care physicians.  While the Primary Care Incentive Program falls considerably short of COGME’s recommendation, it will result in the largest sustained increase in payments to primary care physicians in decades.  Congress should sustain this critically important program, while enacting further reforms to support the value of primary care.

Center for Medicare and Medicaid Innovation

There is substantial agreement that the current Medicare resource-based fee-for-service (FFS) payment system for physicians directly contributes to unnecessary expenditures and undervalues the value of care provided by internal medicine specialists and other primary care physician specialties. It provides an incentive for physicians and other healthcare professionals to deliver services of marginal or uncertain value. The ACA accelerates the adoption and dissemination of alternatives to conventional fee-for-service by establishing a new Center for Medicare & Medicaid Innovation (CMMI). The CMMI will allow the Centers for Medicare and Medicaid Services (CMS) to test models that promote broad payment and practice reform within Medicare (as well as Medicaid and the Children’s Health Insurance Program) with a particular focus on reforming primary care payments while preserving or enhancing the quality of care.

Importantly, the ACA provision authorizing the CMMI requires that it consider models to promote broad payment and practice reform in primary care, including patient-centered medical home (PCMH) models for high-need individuals, and models that transition primary care practices away from fee-for-service based reimbursement. The PCMH is a care model that has received substantial support from a variety of physician organizations, businesses, health plans, and patient advocacy groups. It is typically delivered by a team of healthcare professionals within a physician-led primary care practice and it requires delivery of care that centers on the needs and preferences of the patient. It expands care access, it promotes improved care coordination/integration, it promotes care management and education toward care self-management where appropriate, and it is based on the development of processes to ensure continuous quality improvement. The model also recognizes the importance of integrating into patient care members of the medical neighborhood, including specialty and subspecialty practices, hospitals and other related care providers, including compensating non-primary care specialists for their essential contributions to coordinating care with a patient in a PCMH. A recent review of early results of PCMH demonstration projects reflects its potential to improve care quality, patient access and lower costs.

The concept of encouraging adoption by Medicare of the PCMH model has a long legacy of bipartisan support. When Republicans were in control of the 109th Congress, legislation was enacted to require that Medicare initiate a demonstration project to enroll Medicare patients in Patient-Centered Medical Homes, and Republicans and Democrats alike have continued to recognize the importance of encouraging broad adoption of PCMHs in Medicare and other programs.

Also of significance is the provision allowing for the rapid testing and implementation into the federal healthcare system of those payment changes found to be effective. The Secretary has authority to broadly implement into the Medicare program aspects of projects that have been found to be successful without the necessity of further legislative approval. Through the CMMI, the ACA will encourage innovation and adoption of delivery system and payment reforms to allow Medicare patients to receive services of high quality and effectiveness, while helping to ensure the efficient use of limited federal resources.

Medicare Shared Savings Through Accountable Care Organizations

The ACA instructs the Secretary to implement, no later than January 1, 2012, a voluntary shared savings program that promotes accountability for services delivered to a defined Medicare fee-for-service (FFS) patient population with the goals of increasing the quality and efficiency of services delivered.  The College supports the implementation and evaluation of this program. It directly provides an incentive for physicians and other healthcare professionals to improve care integration and efficiency while, at the same time, helping to ensure improved quality of delivered care.  It also correctly recognizes the importance of primary care as a foundation of these Accountable Care Organization efforts. Finally, it is structured, at least legislatively, to allow entrance into the program of a variety of different types collaborating practices. This flexibility serves to promote innovation that will help better serve our Medicare beneficiaries. The College will monitor the rule making process very closely to ensure that this flexibility is maintained upon implementation—particularly the ability of small practices that provide the majority of care under Medicare to participate effectively within this program. This integrated model of payment appears quite promising. CMS should have the resources to implement and evaluate it effectively as an alternative payment model under Medicare.

Identifying and Correcting Mis-Valued Services Paid Under the Medicare Physician Fee Schedule

The ACA contains a provision, which took effect in March, 2010, which promotes identification and correction of mis-valued physician fee schedule services. The physician fee schedule drives approximately $80 billion in annual Medicare payments for physician services and substantially affects payments made by other payers.  Congress included the provision on the belief that too little attention is devoted to monitoring whether services have become overvalued or mis-valued. Mis-valued services distort incentives and can contribute to the overuse or underuse of specific services on the basis of financial, as opposed to clinical, reasons. In addition, inappropriate valuation of services affects physicians’ decisions to enter or remain in specialty fields that perform undervalued services. Payments to primary care physicians, and other physician specialties that primarily provide undervalued evaluation and management services, have been significantly adversely affected by these mis-valued service codes.

The provision contains two main parts: providing direction to the Secretary of the Department of Health and Human Services (HHS) largely for identifying and correcting mis-valued services; and requiring the Secretary of HHS to establish a process to validate relative value units for physician fee schedule services. The College continues to support and participate in the current process in which the American Medical Association’s Relative Value Update Committee (RUC) provides recommendations to CMS regarding changes in the value of physician services. At the same time, we believe that the Secretary needs to have the capability and responsibility to better confirm and validate these recommendations, and expand on the recommendations provided by the RUC—particularly regarding over-valued services.

Until new payment models that more effectively promote high quality and efficient care are designed and implemented on a widespread basis, ensuring adequate resources within CMS to refine the current Medicare physician fee schedule remains crucial. This helps to ensure that services are delivered for appropriate clinical, not financial, reasons and it helps increase the entrance of qualified physicians and other healthcare professionals into primary care and other fields that are adversely affected by the undervaluation of their services.

II.                Improved Benefits in the Traditional Medicare Program

Coverage of Preventive Services

The ACA provides incentives for Medicare beneficiaries to obtain preventive services which will lead to the prevention and treatment of health problems. (Incentives are also provided for Medicaid recipients and the privately insured.) Beginning in 2011, the Act eliminates coinsurance, deductibles and copayments for approved preventive services and tests. These include blood-pressure and cancer screenings, mammograms, Pap tests, and immunizations. Also beginning in 2011, Medicare beneficiaries became eligible for a new benefit, an annual wellness exam that includes a wellness check-up and personalized prevention plan at no cost to the patient.

Depending on the results of the wellness exam, patients will be provided with a 5-10 year plan for screenings and other preventive services as well as advice and referrals for educational services covering weight loss, physical activity, smoking cessation and nutrition.

The prevention of disease is an important aspect of care delivered by internal medicine specialists. As a result of the ACA, 50 million Medicare patients are now able to take advantage of these positive incentives for improved health status through preventive services.

Phase Out of the “Doughnut Hole”

The ACA provides subsidies to reduce and eventually eliminate the “doughnut hole,” the gap in coverage in which the enrollee is responsible for the full cost of prescription drugs once an initial period of coverage is exceeded. Prior to enactment of the ACA, once in the doughnut hole, beneficiaries were required to bear all of the cost of prescription medication until a catastrophic threshold was reached.

Beginning in 2011, the ACA requires that drug manufacturers provide a 50 percent discount on brand name prescriptions while the beneficiary is in the doughnut hole. In addition, Medicare total cost calculations will include the non-discount price of the drugs. Thus beneficiaries will be able to reach the catastrophic threshold more quickly while benefiting from decreased out-of-pocket spending.

Beginning in 2011, a federal subsidy is phased in for generic drugs so that the coinsurance is reduced from 100 percent to 25 percent by 2020 for beneficiaries within the doughnut hole.

As it is estimated that about 25 percent of beneficiaries fall into the doughnut hole in a given year, these ACA provisions provide a valuable benefit to millions of America’s seniors.

III.             Empowering Patients and Physicians to Make Informed Decisions

Funding for Comparative Effectiveness Research to Inform Clinical Decision-making

From the perspective of practicing physicians and their Medicare (and other) patients, the insufficient availability of data about what works best for whom creates critically important limitations for the clinical decision-making process. Each day, in the privacy of the examination room, patients are treated for conditions for which there are numerous treatment options. This includes treatment for common conditions, such as intermittent heartburn, more serious chronic conditions, such as high blood pressure or diabetes, and immediate life-and-death issues, such as choosing the best approach for the treatment of acute coronary syndrome or an aortic dissection. The limited availability of valid data to supplement the physician’s clinical experience and professional knowledge – data that compare the clinical effectiveness of different treatments for the same condition – makes it difficult to ensure that an effective treatment choice is made, one that meets the unique needs and preferences of the patient.

The ACA helps to address this issue by establishing an independent, non-profit, tax exempt corporation, known as the “Patient-Centered Outcomes Research Institute” (PCORI) to provide comparative effectiveness information to clinicians and patients.  The law also funds the development of shared decision making tools to translate the results of the research into information that is understandable by patients and that can be the basis of shared decision-making with their personal physicians. In this way, Medicare patients and their physicians will be empowered to make informed, and therefore improved, health decisions based on the best and most recent evidence of clinical effectiveness. 

IV.              Additional Needed Legislation

ACP believes that Congress should enact additional legislation to facilitate further payment and delivery system reforms that recognize and support the value of care provided by internists and other primary care physicians.

Repeal of the SGR Formula

It is essential that the Medicare Sustainable Growth Rate (SGR) formula be repealed and replaced with a new framework that provides predictable, positive and stable updates for all physician services and protects primary care from experiencing cuts in payments due to increases in utilization in other physician services. This could be accomplished by one or more of the following options, potentially in combination with each other: (1) setting a floor, e.g., at no less than the percentage annual increases in the cost of delivering services, on payment updates for primary care services, (2) providing higher spending targets for primary care than for other categories of services, should Congress decide to replace the SGR with separate spending targets for distinct categories of services, (3) exempting practices that are organized as a PCMH, and that are recognized as such by a process established by HHS, from payment reductions in any given calendar year and (4) exempting primary care services from budget neutrality adjustments resulting from changes in relative values and behavioral offset assumptions.

More Effective Medical Liability Reforms

ACP is one of more than 100 physician membership organizations that have endorsed H.R. 5, the “Help Efficient, Accessible, Low-cost, Timely Healthcare (HEALTH) Act of 2011.” Introduced by Representative Phil Gingrey, MD, this bill would enact proven reforms to reduce the costs of defensive medicine, including caps on non-economic damages. We also are encouraged that President Obama said in his State of the Union address that he is willing to “look at other ideas to bring down costs, including one that Republicans suggested last year – medical malpractice reform to rein in frivolous lawsuits.” Realizing that this issue is outside the jurisdiction of the Ways and Means Committee, ACP agrees that there is an opportunity now for Congress to work with the president on a bipartisan basis to address the enormous costs of defensive medicine, which contribute to higher spending by the Medicare program.

The ACA authorizes grants for state programs to improve patient safety and test alternatives to the traditional medical liability tort system. Although such grants may help identify effective ways to improve patient safety and reduce the costs of defensive medicine, the ACA did not do enough to address the costs of defensive medicine and to ensure that patients who are truly injured by medical negligence get the compensation they need for their injuries.

Although estimates of the cost of defensive medicine vary, one recent study estimates the cost at $55.6 billion annually—more than half of the estimated annual federal spending under the ACA.  Other experts believe that the cost of defensive medicine is much higher.  The cost of defensive medicine leads to higher Medicare spending because the program ends up paying for unnecessary services, services that are billed to the program because physicians fear being sued if they don’t order every extra marginal test and treatment available.  Such excess Medicare spending leads to higher out-of-pocket costs to Medicare enrollees, contributes to the growing federal deficit, and undermines the long-term financing of the program.  The tens of billions of dollars wasted each year on defensive medicine could free up funding to provide coverage to many millions of Americans, to fund other needed programs, and/or to reduce the federal budget deficit.


Tort reform and changes in legal standards concerning professional liability are needed to remove a major impediment that inhibits physicians from responsibly ordering tests and procedures based primarily on clinical and cost-effectiveness in accord with practice guidelines.

In addition to the proven reforms in H.R. 5, ACP believes that health courts offer a promising approach that should be broadly tested nationwide. Under today’s judicial system, judges and juries with little or no medical training decide medical malpractice cases. The majority of medical malpractice cases involve very complicated issues of fact, and these untrained individuals must subjectively decide whether a particular provider deviated from the appropriate standard of care. Therefore, it is not at all surprising that juries often decide similar cases resulting in very different outcomes.

The concept of health courts (also called “medical courts”) is a specialized administrative process where judges, without juries, experienced in medicine would be guided by independent experts to determine contested cases of medical negligence. The health court model is predicated on a “no-fault” system, which is a term used to describe compensation programs that do not rely on negligence determinations. The central premise behind a no-fault system is that patients need not prove negligence to access compensation. Instead, they must only prove that they have suffered an injury, that it was caused by medical care, and that it meets whatever severity criteria applies; it is not necessary to show that the third party acted in a negligent fashion.


While ACP acknowledges the strong disagreements between Republicans and Democrats on many aspects of the ACA, the legislation contains provisions that have enjoyed the support of both parties.  To be clear, ACP does not believe that the ACA should be repealed, but we do believe that Congress should seek common ground on building and improving upon the law, particularly as it relates to payment and delivery system reforms.  

Both parties have long supported the need to improve and reform payment policies to support the value of primary care, to fund primary care training programs, and to improve the quality of services delivered. These are not Democratic or Republican issues, but the right thing to do for Medicare and other patients and constituents. The College is hopeful that such programs will continue to find bipartisan support in the 112th Congress. ACP stands ready to assist in bringing the two parties together on these important issues. Together we can achieve the very best health care system possible for America’s seniors and all of its citizens.