Congress About to Change Medicare
Payment for Physicians; What It Means for Patients, Docs
After years of yearly political
battles over what Medicare should pay doctors, a somewhat permanent fix
seems about to win passage in Congress.
By Mary Agnes Carey, KHN Staff
Jan. 16, 2014 -
After years of legislative wrangling and last-minute patches,
expectations are high among physician groups, lawmakers and Medicare
beneficiaries that Congress could act this year to permanently replace
the current Medicare physician payment formula. While committees in both
chambers have approved their own "doc fix" proposals, the approaches
have yet to be reconciled, and none have identified how they would pay
for a repeal.
Below are some frequently asked
questions and answers about the formula – known as the "sustainable
growth rate" – and how Congress may change it.
Q: What is the sustainable
A: Known as the SGR, the formula
was created as part of a 1997 deficit reduction law designed to rein in
federal health by linking physician payment to an economic growth
target. For the first few years after it was created, Medicare
expenditures did not exceed the target and doctors received modest pay
increases. But in 2002, doctors reacted with fury when they came in for
a 4.8 percent pay cut. Every year since Congress has
staved off the scheduled cuts. But
each deferral just increased the size – and price tag – of the fix
needed the next time.
Q: What is Congress doing to
scrap the SGR and what would they replace it with?
A: Two committees in the House –
the Energy and Commerce and Ways and Means panels – and the Senate
Finance Committee have passed bills that would repeal the SGR and
replace it with a system of rewarding physicians based on the quality of
care they provide to Medicare patients rather than the number of
services performed. The goal is also to get doctors to focus more on
coordination and prevention to improve quality and reduce costs.
Any final SGR bill is also likely
to address other health policies – known as extenders – that Congress
renews each year during the SGR debate. They 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
Q: What do doctors say about the
A: Doctors' groups are pushing hard
for an SGR repeal this year. "This long-overdue policy change provides
the stability that physicians need to pursue delivery innovations that
help improve patient care and reduce costs for American taxpayers,"
American Medical Association President Ardis Dee Hoven said in a
statement last month.
For physicians, the repeated
prospect of facing big payment cuts is a source of mounting frustration.
Some say the uncertainty has led them to quit the program, while others
are threatening to do so. Still, defections have not been significant to
date, according to Medicare Payment Advisory Commission (MedPAC), which
advises lawmakers on Medicare payments. In a
March 2013 report, the panel
found that while beneficiaries access to care was good, for some
“seeking a specialist were more likely to report that they had no
problem finding a doctor than beneficiaries seeking a primary care
Q: Will repealing and replacing
the SGR change the way physicians treat Medicare patients?
A: Experts suggest that overhauling
Medicare’s physician payment system could make significant changes in
how physicians practice medicine. Shifting Medicare’s incentives from
volume to quality measures will increase efficiency, improve care
coordination and produce better medical outcomes, they say.
Just as many
doctors scrutinize their coding and billing practices today, the hope is
that over time they’ll pay as much -- or more -- attention to the new
system’s measures of quality, safety, and patient satisfaction, says Dr.
Robert M. Wachter, associate chairman of the Department of Medicine at
the University of California, San Francisco.
For example, a physician’s
electronic medical records monitoring system may provide prompts to
ensure she is providing all the appropriate evidence-based care at the
right time. The physician may also insist on an hourly meeting each week
with her partners and practice manager to review the group's
performance, a conference that in the current system is likely to not be
compensated. "In short, lots of activities that today are completely
elective and non-mission critical, but would no longer be," Wachter
A major challenge to replacing the
SGR is whether effective alternative payment systems can be developed
quickly, former Centers for Medicare and Medicaid Services administrator
Mark McClellan noted
in an article published earlier this month in the Journal of
the American Medical Association.
"Although there is promising
evidence for many payment reforms now, no specific alternative payment
models have been identified that could clearly reduce costs while
improving quality across the nation," wrote McClellan, who is now is a
senior fellow and director of the Health Care Innovation and Value
Initiative at the Brookings Institution.
The SGR reinforces what many
experts say are some of the worst aspects of the current fee-for-service
system – rewarding doctors for providing more tests, more procedures and
more visits, rather than for better, more effective care. MedPAC has
advocated for the formula's repeal, calling it
"fundamentally flawed" and said
it "has failed to restrain volume growth and, in fact, may have
But those figures don't include the
cost of any pay increase for physicians. The plan calls for giving
physicians a yearly payment increase of 0.5 percent through 2023, which
would add nearly $20 billion to the bottom line. Adding funding to
continue or make permanent the Medicare extenders would also make the
final deal more expensive. The Senate Finance package, which includes
many of the extenders as well as increased payments to doctors who
comply with new quality measures, will cost $148.6 billion over the next
decade, according to CBO.
At a Dec. 11 markup of legislation
to repeal the SGR, Senate Finance Committee Chairman Max Baucus,
D-Mont., noted that the Congress has spent $150 billion on those
temporary patches – more than current estimates for a permanent fix.
Q: How is Congress going to pay
A: That's unclear. None of the
committees have identified how to finance the doc fix, intentionally
staying away from the thorny issue in order to build political momentum
to pass the legislation. Other Medicare providers, such as hospitals,
are concerned that Congress may reduce their Medicare payments to help
finance a repeal of the SGR. Some
physicians groups have
previously advocated taking money from the Overseas Contingency
Operations fund, discretionary funding for the wars in Iraq and
Afghanistan, to finance an SGR repeal.
Q: When is Congress expected to
A: Just before leaving town for a
holiday break in late December, lawmakers in both chambers voted to
extend the current SGR fix
until March 31, avoiding the
scheduled 24 percent cut that was set to go into effect Jan. 1.
Advocates say Congress can find consensus – and money – to move a
permanent SGR repeal by the end of March.
Baucus, who has been nominated to
be the U.S. ambassador to China, is eager to get the SGR repeal done
before his likely Senate confirmation. But even if that doesn’t happen,
the bipartisan, bicameral interest in a permanent SGR fix – plus
continued heavy pressure from physician groups – may be what’s needed to
push the measure through Congress and onto the president's desk.
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