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Max Baucus D-Mont.

It's time 'to break cycle' on SGR: Baucus

By Rich Daly and Jonathan Block
Posted: May 14, 2013 - 1:45 pm ET

Senate Finance Committee Chairman Max Baucus opened the panel's first hearing in six years on Medicare physician pay with assertive rhetoric about scrapping the hated sustainable growth-rate formula this year.

“In 2010 alone, we passed six short-term fixes,” Baucus (D-Mont.) said. “It is time to break this cycle.” He did not, however, say when a bill might be introduced.

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The activity in the Senate—with House committees working on the issue, as well —is viewed as a positive sign among physician advocates that Congress may in fact do something more lasting this time.

The formula was created in 1997 to limit the program's spending growth by linking physician pay to the growth of the economy. One of the biggest stumbling blocks to replacing the system has been the price tag that grew each time Congress delayed the reimbursement cuts that the formula would impose.

This year, however, a recalibrated estimate from the Congressional Budget Office knocked more than $100 billion off that toll, meaning lawmakers need to come up with $138 billion rather than $245 billion in order to offset the cost of changing the system.

“This is a window of opportunity,” said Baucus, who revealed last month that he would not campaign for another term.

Baucus 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.

But the Senate panel returned to 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.”

Baucus said Tuesday that he is encouraged by the willingness of physicians groups to put forward ideas for alternative payment systems. He also said he is looking for “short-term, ready-to-go solutions” that would allow Congress to replace the SGR this year and lay the groundwork for a transition from the fee-for-service payment approach to a value-based model.

The hearing featured 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.

Follow Rich Daly on Twitter: @MHrdaly

Follow Jonathan Block on Twitter: @MHjblock

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