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Medicare & Medicaid News

Bipartisan Plan Would Shift Medicare’s Doctor Payment System To Reward Quality

Long battle over how Medicare compensates physicians takes a new turn; AMA offers support

By Mary Agnes Carey, KHN Staff Writer

Sen. Max Baucus, Rep. Fred Upton and Rep. Dave Camp are chairmen of the committees that wrote the proposal to replace the Medicare payment formula (Photos via Win McNamee/Getty Images, House GOP via Flickr, Brendan Smialowski/Getty Images).

Feb. 6, 2014 - The bipartisan leadership of three Senate and House committees introduced legislation Thursday to overhaul the way Medicare pays physicians.

The package, which does not specify how it would be paid for, would repeal the current system, which sets Medicare physician payment rates through a 1997 formula based on economic growth and known as the "sustainable growth rate" (SGR).  Physicians would receive a 0.5 percent increase for each of the next five years as Medicare transitions to an alternative payment model designed to reward physicians based on the quality of care provided, rather than the quantity,  as the current payment formula does.


Related Archive Stories


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 Writer

Jan. 16, 2014


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"This legislation today provides stability for physicians so they will no longer face the uncertainty of massive cuts, but also begins the process of improving how we pay for medical care to focus on positive results for seniors," Ways and Means Committee Chairman Dave Camp, R-Mich., said in a statement.

The bipartisan leadership of the Senate Finance and House Ways and Means and House Energy and Commerce panels announced the deal -- as the Senate was expected Thursday to confirm Finance Chairman Max Baucus, D-Mont.,  to become the next U.S. Ambassador to China. Baucus had made the SGR fix a top policy priority and had hoped to wrap up a deal before his departure.

"Congress has spent a decade lurching from one 'doc fix' to the next, creating a new, unnecessary threat to seniors’ care each time. Enough is enough," Baucus said in a statement. "This proposal would bring that cycle to an end and fix the broken system."

The American Medical Association immediately welcomed the compromise. AMA President Ardis Dee Hoven said in a statement, "Congress has been debating the shortcoming of the SGR policy for more than decade. … It is time for action to repeal the SGR and establish a transition to a new more stable Medicare physician payment policy to better serve America’s senior citizens."

The legislation does not include funding for a package of Medicare policies – known as extenders --  that include items such as additional funding for therapy services, ambulance services and rural hospitals and a program that allows low-income people to keep their Medicaid coverage as they transition into employment and earn more money. The extenders were part of the package Senate Finance approved in December.

By Mary Agnes Carey

Some of this information is reprinted from with permission from the Henry J. Kaiser Family Foundation. You can view the entire Kaiser Daily Health Policy Report, search the archives and sign up for email delivery. © Henry J. Kaiser Family Foundation. All rights reserved.


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