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Congressional Committees Offer Plan to Fix Medicare Doctor Payments

SGR on chopping block (October 31)

According to a report from the Kaiser Family Foundation, the Democratic and Republican leaders of two key congressional committees have agreed on a framework to scrap the problematic Medicare payment formula for physicians and replace it with one that would link physician reimbursement to the quality of care provided, a step that could put an end to the annual “doc fix” debate.

The discussion draft released Oct. 31 by the Senate Finance and House Ways and Means committees would do away with the Sustainable Growth Rate (SGR). That formula, adopted as part of the deficit-reduction law in 1997, will reduce Medicare physician payments by nearly 25% next January 1st unless Congress intervenes. Stopping scheduled payment cuts caused by the SGR has become a yearly ritual on Capitol Hill, leading to doctors’ frustration with the system and a growing budget problem because each deferral increases the size and price tag of the next fix.

The proposal would make a historic shift in doctor payments, moving physicians from the traditional system in which they are paid for volume and instead using financial incentives to encourage them to move to alternative payment models emphasizing quality care. The framework would repeal the SGR and instead hold doctors’ pay at current levels as alternative payment models are developed and tested. It would combine some existing Medicare physician quality programs into a new initiative starting in 2017 that would offer doctors additional pay based on their performance on value-based criteria, such as making more same-day appointments for urgent needs and enhancing their use of electronic medical records.

Providers who receive a significant portion of their annual revenue from an alternative payment model would receive a 5% bonus through 2021. Those models could include accountable care organizations (ACOs), in which doctors and hospitals work together to reduce the cost of care for patients and share in those savings, or a patient-centered medical home, where a primary care practice oversees all of the medical needs of its patients and monitors the use of specialists.

The proposal would also create a process to ensure accurate payment for provider services, reward care coordination for patients with multiple chronic conditions, and introduce physician-developed care guidelines to reduce “inappropriate care that harms patients,” according to a summary.

Source: Kaiser Health News; October 31, 2013.

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