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Could Congress Be Ready to Fix Medicare Pay For Doctors?

Politicians debate permanent replacement for ‘sustainable growth rate’

With a deadline fast approaching, bipartisan negotiations are heating up in the House of Representatives to find a permanent replacement for Medicare’s physician payment formula. But the tentative package being hammered out behind closed doors contains key provisions that are likely to raise objections from both Republicans and Democrats, according to Kaiser Health News.

Unless Congress takes action by the end of this month, doctors who treat Medicare patients will see a 21% payment cut.

For doctors, the nail-biter has become a familiar but frustrating rite, Kaiser says. Lawmakers invariably defer the cuts prescribed by the 1997 reimbursement formula, which everyone agrees is broken beyond repair. But the deferrals have always been temporary because Congress has not agreed to offset cuts to pay for a permanent fix. In 2010, Congress delayed scheduled cuts five times.

The current proposal for a permanent fix may not include full financing for repealing the payment formula, according to congressional aides and industry lobbyists who have been briefed on the talks. That provision could run into concerns from many Republicans and some Democrats.

In addition, Senate Democrats are leery of another provision reportedly part of the negotiations –– charging wealthier Medicare beneficiaries more for their coverage.

According to Kaiser, the current problem is a result of efforts years ago to control federal spending –– a 1997 deficit reduction law that called for setting Medicare physician payment rates through a formula based on economic growth, known as the “sustainable growth rate” (SGR). For the first few years, Medicare expenditures did not exceed the target, and doctors received modest pay increases. But in 2002, doctors were furious when they were hit with a 4.8% pay cut. Every year since, Congress has staved off scheduled cuts. But each deferral only increased the size of the fix needed the next time.

The Medicare Payment Advisory Commission (MedPAC), which advises Congress, says that the SGR is “fundamentally flawed” and has called for its repeal. The SGR provides “no incentive for providers to restrain volume,” the agency said.

Money is the biggest problem standing in the way of Congressional action. An earlier SGR overhaul plan produced jointly by three key congressional committees would cost $175 billion over the next decade, according to the Congressional Budget Office.

Although the current negotiations among key House leadership and staff from committees with jurisdiction over the SGR have been behind closed doors, some details are emerging.

Last year’s proposal from the House Energy and Commerce and Ways and Means committees and from the Senate Finance Committee is reportedly the basis of the current SGR talks, according to lobbyists and aides, in part because it enjoyed bipartisan support and would encourage better care coordination and chronic care management, ideas that experts have said are needed in the Medicare program.

That proposal would have scrapped the SGR and given doctors a 0.5% increase for each of the next 5 years as Medicare transitions to a payment system designed to reward physicians based on the quality of care provided, rather than on the quantity of procedures performed, as the current payment formula does.

Tacking on a package of other health measures –– known as extenders –– that Congress renews each year during the SGR debate would push the cost even higher. These measures include additional funding for therapy services, ambulance services and rural hospitals, as well as continuing a program that allows low-income people to keep their Medicaid coverage as they transition into employment and earn more money.

Legislation to repeal the SGR could move in the House as early as the week of March 16, lobbyists said.

Senate Democratic aides said that they expected that Democrats and Republicans in that chamber will want to offer amendments to the emerging House package, making it difficult to pass any overhaul before the Senate’s 2-week break, scheduled to begin on March 30.

If the SGR issue can’t be resolved by March 31, doctors can expect Congress to pass another temporary “fix” as negotiations continue, Kaiser says.

Source: Kaiser Health News; March 16, 2015.


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