AMA files lawsuit over undervalued Medicare pay

Sustainable growth rate at issue

The American Medical Association (AMA) has filed suit in federal court in an attempt to get the Department of Health and Human services to correct errors in the system used by Medicare to pay physicians.

The suit, filed in the U.S. District Court for the Northern District of Illinois, charges that the department acted contrary to the wishes of Congress by refusing to alleviate problems in the system used to calculate reimbursement for physician services.

At issue is how the sustainable growth rate (SGR), part of the methodology used to adjust Medicare payments, was calculated in 1998 and 1999 by the Health Care Financing Administration (HCFA).

The AMA says that by using projections instead of actual values, HCFA has underestimated the growth in Medicare spending and has undercompensated physicians by an estimated $3 billion. The suit charges that HCFA has reneged on its promise to correct its erroneous projections.

Patient care without reimbursement?

"Physicians have faced years of undercompensation without ever abandoning Medicare patients. HCFA’s ongoing refusal to use actual values in calculating the SGR is the equivalent of asking physicians to care for approximately 1 million Medicare patients annually without compensation," says Thomas R. Reardon, MD, AMA president.

The AMA contends that Congress never intended the SGR to be based exclusively on projections without any way to tie physicians’ payments to real data or compensate for shortfalls in calculations.

"It will be increasingly burdensome for physicians to provide care for the elderly through the Medicare program each year the uncorrected projection errors are allowed to carry over into subsequent years," Reardon says.