House Panel Releases Legislative Draft Of New Medicare Physician Payment System

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By Steve Teske  


The House Energy and Commerce Committee May 28 released a third draft of a proposal to revamp Medicare's physician payment system--this time in legislative language--but it appears that it and the House Ways and Means Committee may be parting ways on developing a bill, at least for the time being.

Energy and Commerce Committee Republicans released a 24-page draft of legislation that would repeal the sustainable growth rate formula in the current reimbursement system and replace it with a system based on quality measures and new payment models.

The Energy and Commerce Committee was working with the House Ways and Means Committee on producing legislation, but physician sources said May 28 it appears the committees may decide to develop separate bills. A press release from Energy and Commerce announcing the third draft did not say it was a joint product with Ways and Means.

Congressional staff from Energy and Commerce met with physician groups May 28 to discuss the third draft and take questions. Sources at the meeting said staff from the Senate Finance Committee also were at the meeting, but not staff from Ways and Means.

The Finance Committee has held several hearings on the issue in recent months but has yet to outline a physician payment fix proposal (94 HCDR, 5/15/13).

“Sounds like [the two House committees] have hit the pause button for the time being on the bi-committee approach,” former Ways and Means Health Subcommittee staff director Dan Elling told BNA. Elling is now a senior policy adviser for Alston & Bird LLP.

Stakeholders said they were uncertain late May 28 why the committees have put a hold on their joint work. Julius Hobson, a policy adviser at Polsinelli PC in Washington, told BNA it appears Ways and Means wants to move doc fix legislation later in the fall as part of a larger budget deal that may be reached with President Obama, but Energy and Commerce wants to move a stand-alone bill. Hobson said policy differences between the two committees also may be involved.

Separate Bills Possible

Hobson said release of the legislative draft has moved the process of producing legislation forward, but having two committees working on separate tracks ultimately may slow the process.

“I don't have a read on how this is going to go,” he said.

“We're moving ahead--the discussion is moving forward, but I look forward to seeing something from Ways and Means,” Hobson said.

Press aides for both committees were unavailable for comment May 28.

Energy and Commerce lawmakers want comments on the latest draft by June 10. Comments can be sent to The Energy and Commerce Health Subcommittee also is holding a hearing on the issue June 5.

The Energy and Commerce and Ways and Means committees April 3 released a second draft of their plan to permanently fix Medicare's physician payment system by replacing it with one using physician-endorsed, quality-of-care measures and other metrics (65 HCDR, 4/4/13). The third draft is written in legislative language; the first two were not.

Three Phases

The new system would be implemented in three phases. In phase one, the sustainable growth rate formula in the physician payment system would be repealed, and physicians would be provided an unspecified period of stable payments. In phase two, payment would be based on quality-of-care measures. Phase three would call for further reform of Medicare's fee-for-service payment system to account for the efficiency of care provided.

Sources said meeting attendees asked about the creation of quality measures that would be used in a new system; when legislation will be considered by the committees; and how it would be paid for.

Congressional staff replied that no decisions have been made about how to pay for a physician payment fix and that the Department of Health and Human Services would primarily be responsible for developing new quality measures, in conjunction with physician groups, sources said.


The committee released a 24-page draft of legislation that would repeal the sustainable growth rate formula in the current reimbursement system and replace it with a system based on quality measures and new payment models.  



Medicare's sustainable growth rate, or SGR, formula is designed to ensure that yearly increases in costs per Medicare beneficiary do not exceed the growth in gross domestic product. The SGR system has produced Medicare pay cuts that have been averted by Congress via numerous short-term legislative fixes over the past decade.

The Congressional Budget Office has lowered the cost of freezing Medicare physician payment by about $100 billion over 10 years, to a price tag of $139 billion, due to lower-than-anticipated Medicare cost growth in recent years.

As a result, lawmakers and physician groups say this year provides a rare opportunity to permanently fix the system at a lower cost. Physicians' Medicare reimbursement will be reduced about 25 percent in January 2014, unless Congress acts.

More Efficient Care

In its press release, the Energy and Commerce Committee said the draft legislation “incorporates feedback received from stakeholders on the initial proposal. The policy would repeal SGR and, in return, replace it with an improved fee-for-service system in which providers--working with the Secretary of Health and Human Services--develop quality measures that will lead to better care in a more efficient manner.”

Providers also will have the option of leaving the fee-for-service system and opting instead for new ways of delivering care that put an even greater emphasis on quality and efficient care, the release said.

“Unveiling our committee's draft legislation is an important milestone in our thoughtful, collaborative efforts to repeal SGR,” Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said in the release.

“We have made great progress, and the committee continues to seek stakeholder input as the legislative framework evolves. We will continue working closely with Ways and Means Committee Chairman [Dave] Camp [R-Mich.] as well as maintain our ongoing dialogue with committee Democrats as we work toward long-term solutions in the effort to improve quality of care.”

The committee also distributed a document to attendees containing a list of questions on which it is seeking feedback. For example, the committee wants to know how long a period of stable payments for physicians should last while a new system is being developed. Physicians have said a period of stable payments lasting five years will be needed as a new system is tested and put in place.

The committee also wants feedback on how existing quality measures can be melded with current registries maintained by physician specialty groups, and how to establish a system that promotes provider collaboration on quality improvement while also possibly comparing providers with one another in delivering quality.

A section-by-section summary of the legislation is at

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