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House Expected to Vote on Proposed Fix for Medicare Payments to Doctors

Physicians face 21% pay cut

It’s make-or-break time for a Medicare “doc fix” replacement.

The House is likely to vote this week on a proposal to scrap Medicare’s troubled physician payment formula, just days before a March 31 deadline when doctors who treat Medicare patients will see a 21% payment cut, according to Kaiser Health News. Senate action could come this week as well, but probably not until the chamber completes a lengthy series of votes on the GOP’s fiscal 2016 budget package.

After negotiating behind closed doors for more than a week, Republican and Democratic leaders of two key House committees that handle Medicare unveiled details of the package on Friday, March 20. According to a summary of the deal, the current system would be scrapped and replaced with payment increases for doctors for the next 5 years as Medicare transitions to a new system focused “on quality, value, and accountability.”

For doctors, the package offers an end to a familiar but frustrating rite.  Lawmakers have invariably deferred the cuts prescribed by a 1997 reimbursement formula, which everyone agrees is broken beyond repair. But the deferrals have always been temporary because Congress has not agreed to offsetting cuts to pay for a permanent fix. In 2010, Congress delayed scheduled cuts five times.

The current problem is the result of 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 their payments were reduced 4.8%. Every year since, Congress has staved off the scheduled cuts, but each deferral just 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.

For physicians, the prospect of facing big payment cuts is a source of mounting frustration. Some say the uncertainty has led them to quit the Medicare program, while others are threatening to do so.

In a March 2014 report, MedPAC stated that beneficiaries’ access to physician services is “stable and similar to (or better than) access among privately insured individuals ages 50 to 64.” Those findings could change, however, if the SGR cuts were implemented.

The House package would scrap the SGR and give doctors a 0.5% bump 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.

The measure would encourage better care coordination and chronic care management, ideas that experts have said are needed in the Medicare program. It would give a 5% payment bonus to providers who receive a “significant portion” of their revenue from an “alternative payment model” or patient-centered medical home. It would also allow broader use of Medicare data for “transparency and quality improvement” purposes.

The House plan would add 2 years of funding for the Children’s Health Insurance Program (CHIP), a federal–state program that provides insurance for low-income children whose families earned too much money to qualify for Medicaid. While the Patient Protection and Affordable Care Act continues CHIP authorization through 2019, funding for the program has not been extended beyond the end of September.

Starting in 2018, wealthier Medicare beneficiaries (individuals with incomes of $133,500 to $214,000, with thresholds likely higher for couples) would pay more for their Medicare coverage, a provision affecting only 2% of beneficiaries.

Starting in 2020, “first-dollar” supplemental Medicare insurance, known as “Medigap,” would not be able to cover the Part B deductible for new beneficiaries, which is currently $147 per year but has increased in past years.

Legislation to repeal the SGR is expected to move in the House this week, but House members are scheduled to begin a 2-week recess March 27. If the SGR issue can’t be resolved by March 31, Congress could pass a temporary “patch” as negotiations continue, or it could ask the Centers for Medicare & Medicaid Services, which oversees Medicare, to hold the claims in order to avoid physicians seeing their payments cut by 21%.

Source: Kaiser Health News; March 23, 2015.

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