American Society of Hematology

Congress Working on Legislation to Provide Permanent Medicare Physician Payment Solution

Published on: February 14, 2013

Members in the House of Representatives are developing legislative proposals to repeal the Sustainable Growth Rate (SGR) formula used to calculate annual Medicare payment adjustments to physicians. In January the Congress averted a 27.5 percent cut to Medicare physician payment by delaying the deadline for the cuts until December 31, 2013 and pledging to use this year to work out a permanent solution.

Republican leaders on the House Ways and Means and Energy and Commerce Committees have already drafted a three stage proposal repealing the SGR formula and calling for a period of stable payments for physician services starting January 1, 2014. During the second stage, doctors would be paid a base rate, and another portion of their payment would vary according to the quality of the care they deliver. Phase three would include the base rate and adjustments for the quality and efficiency of treatment. The duration of each phase has yet to be determined. The Republican Committee leaders behind the proposal include Representative Kevin Brady (R-TX), Chairman of the Ways and Means Subcommittee on Health, and Ways and Means Committee Chairman Dave Camp (R-MI) and Representative Joe Pitts Chairman of the Energy and Commerce Health Subcommittee and Representative Fred Upton (R-MI), Chairman of the Energy and Commerce Committee.

Representative Brady has indicated that the goal is to create "a stable, reliable reimbursement system that rewards quality from our physicians using their criteria for measurement." The proposal to pay for the fix would come from structural changes to Medicare and would be laid out later.

Committee members and staff are now beginning to vet the proposal among Republican and Democratic lawmakers with the hope of introducing a bill soon. In addition, the Committees' staff invited representatives of medical specialty societies, including ASH, to a meeting to discuss the proposal and to get input on what changes in Medicare's current quality programs (Physician Quality Reporting System, Electronic Health Records and Value-Based Modifier) should be made to enhance physician participation and create a more equitable means to recognize the quality of physician services provided to Medicare beneficiaries. The Committee has asked ASH to provide recommendations on: 1) How best to establish physician-endorsed measures of quality that take into account the differences among specialties and local practices and can recognize risk-adjusted rankings among physician specialty peer groups and improvements in quality over time; and 2) Ways to reduce reporting burdens on practices and private payer initiatives that have been an effective means to recognize quality practice. ASH is developing a comprehensive response and will share the Society's comments with members in the next few weeks.

Ways and Means Democrats and Republicans signaled their interest last year in finding common ground on how payments should be changed. Last April, the Committee on Ways and Means' Republican Members sent a letter to the major medical specialty societies, including ASH, seeking input on a "permanent, fiscally responsible solution to the SGR." ASH provided the Committee with a comprehensive response seeking the repeal of the SGR and recognition of and enhanced payment for cognitive specialists. Representative Brady has indicated that his proposal was developed based on the ideas that were collected from comments and meetings with ASH and other physician groups.

Separately, Representatives Allyson Schwartz (D-PA) and Joe Heck (R-NV) re-introduced the Medicare Physician Payment Innovation Act, which would also establish a period during which cuts under the SGR would not happen, pending deliberations to make recommendations on overhauling the payment formula. The legislation would ensure patient access to physicians while promoting efficiency, quality and value in health care delivery. The bipartisan legislation permanently repeals the flawed Sustainable Growth Rate (SGR) formula and sets out a clear path toward comprehensive reforms of Medicare payment and delivery systems.

Meanwhile, on February 5, the Congressional Budget Office (CBO) released an updated Budget and Economic Outlook: Fiscal Years 2013-2023. Under those budget projections, the cost of repealing the SGR has dropped dramatically due to lower than expected growth in Medicare physician spending. The new cost of freezing payments for ten years is $138.3 billion, more than $150 billion less than the previous projection of $316 billion. The lower figures could aid an effort in the House to develop an alternative to the SGR on a bipartisan basis. However, finding offsets totaling $138 billion over 10 years is still a huge undertaking.

Earlier this year, Congress passed legislation to block a 27 percent payment cut to Medicare physicians that was scheduled to start January 1 and keep rates frozen at current levels for one year. Physician practices would have been devastated if these cuts were not averted. However, physicians will once again face similar cuts on January 1, 2014 unless Congress acts to block or repeal future cuts called for by the SGR. ASH encourages everyone in the practice community to join with the Society in continuing to pressure Congress to permanently repeal the SGR.

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