Healthcare Business News
Max Baucus (D-Mont.)

Bipartisan proposal calls for SGR repeal, fee-for-service fix

By Jessica Zigmond and Andis Robeznieks
Posted: October 31, 2013 - 1:15 pm ET

Physicians, who have been dealing with a decade of uncertainty surrounding what Medicare pays them, appeared guardedly optimistic about a bipartisan proposal to scrap the sustainable growth-rate formula and replace it with a new payment model, even though there's no accompanying plan to pay for it.

The leaders of the Senate Finance and House Ways and Means committees outlined a proposal (PDF) to permanently repeal the SGR formula and reform the fee-for-service system with a model that focuses on value over volume.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) introduced a draft proposal that would freeze current physician payment levels through 2023. After that year, professionals who participate in alternative payment models—such as accountable care organizations and patient-centered medical homes—would receive annual payment increases of 2%, while other professionals would receive a 1% increase.

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The draft also would encourage care-management services for patients with complex care needs by developing new payment codes for these services, and it would “leverage physician-developed standard-of-care guidelines to avoid the unnecessary provision of services,” according to a summary of the bicameral proposal.

The issues addressed in the proposal echo many positions the American Academy of Family Physicians has advocated for years. AAFP President Dr. Reid Blackwelder said he was “pleasantly surprised” to see that movement toward repealing the SGR had not lost its political momentum. “There was certainly anxiety with the shutdown that the likelihood of maybe fixing the SGR was now less likely,” Blackwelder said. “But it just makes sense to move forward.”

While the “pay-fors are not as clear as the rest of the plan” and the effects of a 10-year freeze on current pay levels need to be studied, Blackwelder said removing the threat of draconian cuts to Medicare payment will “create the stability we need to move forward in an innovative and progressive fashion.”

Unless Congress acts this year on at least a temporary fix, physicians participating in the Medicare program will face a 24.4% payment cut Jan. 1. In the last 10 years, Congress has spent almost $150 billion on short-term patches to avert the steep cut. The new bicameral proposal does not suggest how to pay for repealing Medicare's SGR formula, which the Congressional Budget Office estimated earlier this year would cost about $139 billion over 10 years, much less than in previous years due to slower Medicare cost growth. Agreeing to a pay-for is one of the biggest obstacles to repealing the SGR formula, since it likely would involve financial pain for some powerful healthcare industry groups.

Robert Doherty, senior vice president for government affairs and public policy for the American College of Physicians internal medicine specialty society, said the momentum wasn't stopped by the government shutdown. He also said it doesn't appear that the lack of a defined pay-for will slow it down.

“This is bipartisan, bicameral proposal with the full weight of the committee chairmen behind it. Those are pretty influential folks,” Doherty said. “There's a real will to get this over the finish line, and that includes finding a way to pay for it.”

Doherty said it was clear that legislative staff continued to work on the proposal during the government shutdown. He added that the parties involved do not want to have come this far only to come away with just legislating a temporary postponement of an SGR-driven pay cut. “They don't want to have spent all that political capital on just another patch,” he said.

Meanwhile, the plan from the Senate Finance and House Ways and Means Committees shares similarities to the proposal that the House Energy and Commerce Committee approved this summer, but in differs in that the Energy and Commerce proposal includes a 0.5% annual update to physicians between 2014-2018.

The changes in the two drafts don't seem insurmountable, however, according to a joint statement from House Energy and Commerce Chairman Fred Upton (R-Mich.) and Rep. Henry Waxman (D-Calif.), the panel's senior Democrat.

“We are pleased to see the chairmen and ranking members of the Committee on Ways and Means and the Senate Finance Committee are moving forward in a bipartisan fashion, mirroring many of the quality and delivery system reforms in the bill our committee passed unanimously in July,” Upton and Waxman said in their statement. “Today's announcement is good news. We look forward to working with our colleagues to enact a permanent solution that protects beneficiaries, moves Medicare for paying for value not volume, and incentivizes new models of Medicare this year.”

Blackwelder agreed. “We definitely applaud the ability of the House and Senate to find a way to work together,” he said.

American Medical Association President Dr. Ardis Dee Hoven called the proposal “an encouraging development,” a response that typified the cautious reaction from the healthcare industry.

“AMA is currently analyzing the recently released summary, and looks forward to continuing the constructive, bipartisan dialogue that has characterized this process as preparations are made for moving legislation forward,” Hoven said in a written statement released to the press.

The American Medical Group Association said the proposal would “hold physicians accountable for quality and resource utilization and forge a path toward alternative payment models, providing payments for care coordination and appropriate use criteria.”

But AMGA President Donald Fisher was reserved in his comments, while expressing gratitude for the committees' work on the issue. “We look forward to carefully reviewing and providing substantive feedback on the legislative framework under discussion, and we thank both committees for their leadership on this pressing issue," Fisher said in a news release.

Dr. John Noseworthy, Mayo Clinic president and CEO, said in a news release that he was pleased to see a bipartisan, bicameral effort to replace the “outdated” SGR, and he noted that his organization has long advocated moving away from volume-based payments and toward a system that rewards value.

“In order for all providers to truly put the needs of the patient first, healthcare payment must be driven by evidence-based quality measures and proven patient outcomes,” Noseworthy said. “This is a very positive step in the long road ahead to meaningful Medicare reform. We encourage Congress to continue this bipartisan momentum and enact true Medicare physician payment reform this year.”

A few, however, expressed more enthusiasm—particularly the American College of Cardiology. A statement from Dr. John Harold, the organization's president, hailed the proposal as “an important and historic landmark” in the decade-long effort to reform Medicare payment.

Still, physicians have seen this scenario play out many times before without resolution.

“Here we go … again,” tweeted Nancy LeaMond, AARP executive vice president for social impact. “Congressional action on #SGR needed to prevent cuts before Jan. 1.”

Follow Jessica Zigmond on Twitter: @MHjzigmond

Follow Andis Robeznieks on Twitter: @MHARobeznieks

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