Healthcare Business News

Baucus includes pay revamp for docs, hospitals

By Matthew DoBias
Posted: September 16, 2009 - 3:00 pm ET

Hospital payments would be tied to value-based purchasing starting in 2012 and incentive payments would be made available to providers that better coordinate care under a sweeping $856 billion legislative proposal released by Senate Finance Committee Chairman Max Baucus (D-Mont.).

Under the Baucus proposal, called a “Chairman's Mark,” a scheduled 21% Medicare physician pay cut would be replaced by a 5% increase in 2010—and then would be completely refigured starting in 2011. The legislation would reduce annual inflationary updates across almost all provider groups.

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A bill, however, is far from final. Next week, the committee will go through a process where members could amend the bill. And a melding of the Finance Committees package with a bill from the Senate's health panel that passed in July is still required. But the Baucus proposal is seen as key because it contains financial offsets need to pay for the bill.

For hospitals, Baucus' proposal would move them from a system that rewards quality reporting to one that actually pays based on improvement of care. Funding for the program comes from reductions in federal hospital payments, starting at 1% in 2013 and increasing a quarter of a percentage point through 2016, capping at 2%.

Starting in October, hospitals paid by Medicare would not be allowed to receive additional payment for hospitalizations that result from certain ailments that were acquired during a patient's stay.

The proposal also contains numerous changes to physician quality reporting and payment. The bill would expand the physician feedback program, requiring HHS in 2012 to provide reports to doctors that compare their use of resources with that of other physicians or practice groups.

In 2015, physician payment would be docked by 5% if an aggregation of the physician's resource use is at or above the 90th percentile of national utilization.

With the Baucus plan, primary-care physicians would be allowed to collect a 10% bonus payment on select Medicare codes for five years, starting in 2011. The codes cover home visits, office visits and other types of visits. Some general surgeons would also be eligible for the bonus, as well.

Other parts of Medicare are also being greatly affected. Baucus aims to base the calculation of Medicare Advantage benchmarks, for instance, on actual plan costs as reflected in plan bids. Under such a plan, Medicare Advantage plans would compete more directly on the basis of price and quality rather than on the level of extra benefits offered to enrollees.

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