Both a congressional deficit panel and committees with jurisdiction over Medicare are considering plans to fix its physician payment formula, which faces a huge drop at the end of the year.
Looking for a solution
Pressure grows for permanent fix to doc pay formula
The Obama administration moved the Medicare physician reimbursement reductions one step closer to reality last week when it finalized the size of the payment reduction—27.4%—required under the program's cost-control funding formula. That cut is slightly smaller than the 29.5% cut previously expected but physician advocates said it would be equally ruinous to physicians.
Those looming cuts have spurred growing pressure from provider groups to overhaul the physician payment system by replacing the sustainable-growth rate with other models that do not control costs through across-the-board clinician cuts. As the CMS issued the final Medicare physician fee schedule for fiscal 2012, HHS Secretary Kathleen Sebelius issued a statement calling for a permanent “doc fix” and pledging that the Obama administration would “work with legislators on both sides of the aisle to address this issue once and for all.”
Hammering out a so-called doc fix is one of the goals of the deficit reduction supercommittee, said House Speaker John Boehner at a Nov. 3 news conference. That was the first confirmation by a congressional leader that the panel—charged with finding at least $1.2 trillion in deficit reduction by Nov. 24—would include any SGR-related provision.
However, Boehner stressed that whether the panel includes a temporary delay in the Medicare provider cut or a permanent replacement of the SGR formula “is still up in the air.”
The panel would face challenges and opportunities in addressing the physician fee schedule, according to lobbyists tracking the issue. The main advantage is that the committee is authorized to create a massive deficit package that can include anything without facing the threat of amendments or a filibuster.
Replacing the SGR formula, however, could complicate the work of the deficit panel because it would require identifying $293 billion in additional cuts or tax
increases over 10 years to offset the estimated cost. And members of Congress and other advocates are also pushing for the deficit panel to address a number of unrelated issues, and including an SGR fix might pressure the panel to address those, too.
Apart from the supercommittee, the three committees with jurisdiction over the issue also are working on their own doc fix, according to congressional sources, and they expect to produce a plan within the next four weeks. However, it remains unclear whether those committees are considering a temporary or permanent fix to the Medicare physician pay issue.
Congress appears increasingly likely, according to many physician advocates, to eventually approve a two-year, $26 billion freeze of the current payment rates while a long-term solution is negotiated.
Any permanent replacement would need to identify a broadly supported payment system and find a way to pay for scrapping the SGR. There are a growing number of alternatives proposed to the traditional Medicare physician payments for each service, including widespread use of bundled payments for episodes of care or exempting physicians from payment cuts if they use alternative care approaches, such as the medical home model.
The more controversial question that most members of Congress and the Obama administration have shied away from is how to pay for erasing the nearly $300 billion, 10-year cost of scrapping the SGR.
The Medicare Payment Advisory Commission was one of the few to do so when it forwarded a plan to Congress last month that would cut payments to specialists for several years and require drug manufacturers to give rebates to Medicare Part D plans for drugs furnished to low-income beneficiaries, among other offsets. That proposal was blasted by some of the provider advocates and members of Congress who are most adamant in calling for an SGR replacement.
Ultimately, the best motivator for a long-term fix this year, according to provider advocates and healthcare policy experts, may be the mathematical certainty that eliminating the system will grow more expensive with each year it is delayed.
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