House Approves Legislation That Would Eliminate Scheduled Physician Payment Cuts, Provide Two Years of Positive Physician Payment Updates, and Repeal PQRI

August 3, 2007 – On August 1, the U.S. House of Representatives voted 225-204 to approve legislation that would eliminate the scheduled 10 percent cut in Medicare physician payments for 2008 and the scheduled 5 percent cut for 2009. The bill would also replace the physician payment cuts with a 0.5 percent increase in reimbursement rates in each of the next two years and bill would repeal the bonus fund for the Physician Quality Reporting Initiative (PQRI), but allow the program to continue on a voluntary basis.

These provisions are part of a larger health care package introduced by House Democrats on July 24. The bill, called the Children’s Health and Medicare Protection Act (H.R. 3162), would reauthorize the State Children's Health Insurance Program (SCHIP) and increase funding for the program by $47.4 billion over five years.

The bill is expected to cost about $90 billion over five years. Funding for the measure would come from a $.45 Federal tax on tobacco products and a reduction in subsidies to Medicare Advantage private insurance companies over the next four years – both of which are politically controversial.

On August 2, the U.S. Senate voted 68-31 to approve a more limited version of the bill (S. 1893) that would also reauthorize and expand SCHIP but would make no changes in the Medicare program. The Senate bill would expand SCHIP by $35 billion. Funding for this bill would be met with a higher tax increase on tobacco than the House bill, a $.61 tax increase.

The Senate and House versions (S. 1893 and H.R. 3162) will now go to Conference Committee where lawmakers will attempt to reconcile differences.

Outlook: Difficult negotiations lie ahead as lawmakers must decide whether to keep the Medicare Provisions and SCHIP expansion linked. There is pressure on the Congress to work out a compromise to reauthorize the SCHIP program by September 30 when the program is set to expire. President Bush has promised to veto a broad expansion of the SCHIP program, which poses further obstacles.

ASH will continue to keep members apprised of developments.