Healthcare Business News

Lawmakers offer dueling approaches on fixing doc pay

By Rich Daly
Posted: February 6, 2013 - 4:45 pm ET

Dueling legislative approaches to overhaul the Medicare physician payment formula emerged this week.

The new movement on the stubborn problem comes as the Congressional Budget Office revised the 10-year cost of fixing it down by more than 40%, to $138 billion from $245 billion, based on lower spending on physician services in recent years.

There are some general similarities but also critical differences between an approach contained in bipartisan legislation introduced Wednesday and a Republican bill expected in the coming months.

Both a bill introduced Wednesday by Rep. Allyson Schwartz (D-Pa.) and a bill expected from Ways and Means Health subcommittee Chairman Kevin Brady (R-Texas) would replace the sustainable growth-rate formula with temporary increases while replacement methodologies were devised.

But the bills differ on important points, including whether federal officials or physician groups would take the lead in developing new payment systems and the degree to which fee-for-service payments would be eliminated.

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Schwartz's bill (PDF) would mostly unravel the fee-for-service system by requiring physicians to adopt one of several replacement models that the CMS would test and approve over five years. Physicians who did not do so would face successive payment cuts, although a small number of physicians could remain in a modified fee-for-service system if they met certain quality benchmarks or were near retirement.

But that small fee-for-service allowance was not enough to garner the support of the biggest physician advocacy groups such as the American Medical Association, which wanted a larger allowance for rural physicians to continue to use the traditional payment system, according to Capitol Hill sources.

When asked about the lack of support from some of the biggest specialty physician groups, Schwartz emphasized the 17 physician groups that have endorsed her bill, including the American Academy of Family Physicians.

“The positive response from outside organizations, the support from some of the organizations, the diversity of organizations will help as well,” she said.

The Republican alternative (PDF), according to a Ways and Means Committee memo, would continue wide-scale use of a modified fee-for-service system while offering extra payments for physicians that undertook efficiency improvements.

Brady's anticipated bill also was expected to give physician groups a bigger role in determining which replacement payment models the CMS would utilize. His bill would require physician groups to endorse the quality and reporting activities Medicare would use to determine individual physicians' fee-for-service payment increases.

“Healthcare reform shouldn't drive up costs, encourage businesses to drop coverage for their workers or interject more government in between you and your doctor,” Brady said Jan. 15 when he took over the panel.

The CMS would have more authority in the Schwartz bill to determine on its own which alternative payment models tested over several years should serve as replacement payment systems.

Despite the differences in the approaches to a replacement payment system, Schwartz and her cosponsor Rep. Joe Heck (R-Nev.), a doctor of osteopathy, said at a Wednesday news conference that the impending Republican-led proposal was a good sign that their bill may advance. That optimism came despite the bill garnering the support of only six other cosponsors—all Democrats—and no support from GOP Doctors Caucus, which has spearheaded previous physician pay overhaul efforts in the House of Representatives.

“You get every specialty association, and the Doctors Caucus is made up of a bunch of different specialties, and you get them into an area—not everyone is going to agree on all of the points,” Heck told Modern Healthcare. “But it bodes well that there was the proposal put forward by the Ways and Means that is very similar to what is in our bill.”

Heck noted that Schwartz's bill was modified from a version introduced in the last Congress to drop a provision that used estimated war savings as a way to cover the cost of eliminating a scheduled 26.5% cut in Medicare physician pay rates. Many Republicans, including the leaders of the GOP Doctors Caucus, dismiss that approach as a budget gimmick. “That was a stumbling block for a lot of people,” Heck said.

It was unclear what approach the Republican bill would use to offset the cost of eliminating the scheduled physician cut.

Schwartz and Heck said their bill's chances were improved this week when the CBO reduced its estimated 10-year cost of eliminating the looming Medicare physician fee cut from $245 billion to $138 billion.

“It's a smaller hill to overcome,” Heck said. The Schwartz bill did not, however, identify a way to pay for eliminating the cut, and Heck said Congress would need to find one instead of adding it to the federal government's debt.

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