Physicians, Lawmakers Nearing Consensus On Doc Pay System, but Cost Remains Issue

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By Steve Teske  


Physician groups and House lawmakers May 7 appeared to be getting closer to consensus on ways to reform Medicare’s physician payment system, but lawmakers said finding money to pay for a new system remains a formidable challenge.

Physician groups testifying before the House Ways and Means Health Subcommittee urged Congress to adopt a new Medicare physician payment system that includes a five-year transition from the current payment formula and provides positive payment updates during that time while financially rewarding doctors for providing high-quality care.

Many of those criteria mirror those put forth by the House Energy and Commerce and Ways and Means committees in their second draft of a permanent physician payment fix plan (65 HCDR, 4/4/13). Lawmakers have said they hope to have legislation on the House floor by the August congressional recess.

The draft contains language on implementing quality of care reimbursement measures that also reward providers for delivering high-quality care and a “period of payment stability,” although the length of that period and the size of any payment increase are not specified.

The draft would repeal the sustainable growth rate (SGR) formula in the current physician payment plan.

'Getting It Right.'

Subcommittee Chairman Kevin Brady (R-Texas) told reporters following the hearing that a timetable for moving legislation has yet to be set. Rather, lawmakers “are focusing on getting it right and finding the right offsets,” he said.

Brady said more hearings on the issue are expected, and lawmakers continue to receive feedback from more than 80 physician groups.

Brady said physician groups are supporting a five-year transition to a new payment system, but he added that a key question is how long new quality measures need to be in place before the end of a transition to give doctors time to prepare for providing care under a new payment system.

Physicians presented lawmakers with a host of policy options to consider when creating a new payment system. Charles Cutler, chairman of the Board of Regents of the American College of Physicians, testified that a new system should provide for a period of five years of payment updates, during which time physicians would transition to value-based payment (VBP) models.

Qualifying for Higher Payments

During the transition, physicians should have the opportunity to see their payments increased for participating in VBP programs, Cutler said. Physicians should be able to qualify for higher payments by as early as 2014, he added.

VBP updates could be provided through several delivery system pathways, including medical homes, accountable care organizations, and bundled payment systems, Cutler said.

“At the end of the five-year transitional period, the expectation would be that most physicians would be in or well on their way to participating in an approved program,” he said.

Cutler said negative payment updates for physicians “would act as substantial barriers to physicians to transition to value-based models by denying practices the resources needed to successfully transition to new models and likely would force many physicians out of Medicare.”

Kim Allan Williams, a member of the health policy steering committee at the American Society of Nuclear Cardiology, also urged lawmakers to include a five-year transition to a new payment system.

Rewarding Quality Care

“This time frame grants physicians the ability to make investments and practice modifications that may improve quality and efficiency, and to assess alternative payment models both within Medicare and the private sector,” Williams said.

“The overall approach should strive to reward and recognize improvements rather than the development of absolute, punitive thresholds,” he added.

David Hoyt, executive director of the American College of Surgeons, also urged Congress to adopt a five-year transition to a new payment system.

Hoyt said annual payments during the transition should rise perhaps 1 percent annually. Providing no update for five years “would fail to recognize the fact that physician rates have increased only 4.1 percent cumulatively” from 2005 to 2013, despite an increase of 12.8 percent in the cost of providing care, he said.

Although some physician groups have said that transforming the committees’ draft into legislative language acceptable to doctors would be difficult, perhaps the biggest stumbling block would be finding money to pay for a new system.

CBO Lowers Cost

The Congressional Budget Office has said that freezing physicians’ pay for 10 years would cost $138 billion, about $100 billion less than previously estimated. The lower cost is due to a slowdown in Medicare spending, CBO said.

Although the new lower cost has given hope to physicians and lawmakers that Congress will finally adopt a permanent physician fix after approving a series of short-term fixes over the past decade, Brady said in his opening statement that “finding the money to pay for an SGR replacement policy remains a challenge.”

“We will eventually have to go down that hard road not only to pay for a SGR fix but also to address our spending problems,” he said.

Brady in the past has said a new Medicare physician payment system could perhaps be paid for fully or in part by including unspecified Medicare reforms. House Republicans say they are committed to producing a physician payment fix that could be accepted by Democrats, including Senate Democrats, who control that chamber.

That may rule out taking funding from the Affordable Care Act to offset the cost of a physician pay fix, Republicans have said.

Ways and Means Health Subcommittee ranking member Jim McDermott (D-Wash.) said that although the draft SGR proposals produced by Republicans “are a good start,” without more detail, “we can’t know if there’s common ground.”

Potential for Disagreement

McDermott said finding the money to pay for a new system “will likely be the cause of most of our controversy and potential disagreement.”

“It will be difficult, if not impossible, for me and many other Democrats to support a package that is financed by shifting costs to beneficiaries--especially given that there are other offsets,” he said.

McDermott suggested a physician pay fix could be paid for by requiring pharmaceutical companies to provide rebates for drugs provided to low-income individuals eligible for both Medicare and Medicaid.

McDermott said the average Medicare beneficiary has an annual household income of $22,500, compared with $180,000 for the average physician.

“I won’t support a Robin Hood-in-reverse strategy, especially when people have paid into the program for decades,” McDermott said.

By Steve Teske  

Information on the hearing is at

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