Healthcare Business News
Max Baucus (D-Mont.)

Doc pay reform remains a 'top priority'

By Rich Daly
Posted: May 13, 2013 - 6:30 pm ET

Physician advocates see signs of progress in the Senate Finance Committee's hearing Tuesday—the panel's first in six years on replacing Medicare's physician payment system.

Sen. Max Baucus (D-Mont.) last convened a hearing to replace Medicare's sustainable growth-rate formula, which determines physician payments, on March 1, 2007. That hearing was followed by the contentious battle over the passage of the Patient Protection and Affordable Care Act, which was notably silent on Medicare's physician payment system.

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But the Senate panel again started ramping up its focus on the issue last year with a series of “roundtables” featuring physician advocates, former CMS administrators and policy experts.

The discussions were followed by a May 10 letter from Baucus and Sen. Orrin Hatch (R-Utah), ranking member of the Finance Committee, to physician advocates seeking suggestions on a replacement Medicare payment system “that results in high quality, affordable care for seniors.”

“This year, physician payment reform and SGR repeal remain a top priority for the committee,” the senators wrote. “Both of us are committed to seeking a permanent solution that will address the SGR and Medicare physician payment reform.”

The activity by the Senate panel overseeing Medicare has echoed a steady drumbeat of hearings on the physician payment framework by various House panels also overseeing the program.

The increased activity has given some physician advocates hope that the current Congress could finally enact a replacement for the payment model.

“All of the House members and senators we talk to now agree it needs to be fixed,” Louis Goodman, president of the Physicians Foundation, said in an interview. “That's a real change from past years.”

Although Baucus and House Republicans have yet to introduce any legislation to replace the Medicare physician payment system, such a bill is expected later this year in the House.

The Medicare physician pay formula was created in 1997 to limit the program's spending growth by linking physician pay to the growth of the economy. But Congress has voted repeatedly—usually at the last minute—since 2003 to override the formula's physician cuts. But those “fixes” have only delayed the cuts and the cost has grown to an estimated $138 billion according to the Congressional Budget Office. That estimate, however, is 44% less than it was a year ago.

The uncertainty from those looming cuts has left many private practice physicians “frozen” and unable to hire needed staff, make capital purchases or undertake other major financial risks, Goodman said.

Tuesday's hearing will feature three policy experts, Mark Miller, executive director of the Medicare Payment Advisory Commission; Bruce Steinwald, former director of the Government Accountability Office; and Dr. Kavita Patel, managing director of the Engelberg Center for Health Care Reform at the Brookings Institution.

MedPAC has supported repeal of the SGR for 12 years and it laid out the same blueprint this spring to pay for the elimination using a range of pay freezes and cuts to providers that it first proposed in 2011.

Patel was a member of the National Commission on Physician Payment Reform, which was convened last year by the Society of General Internal Medicine. That panel urged a series of physician pay changes in March, including repeal of the SGR and covering the cost of repeal with cuts from the Medicare program as a whole, including both provider reductions and reductions in “inappropriate” services.

Follow Rich Daly on Twitter: @MHrdaly

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