Fee-for-service fix, SGR repeal called for in bipartisan proposal

The leaders of the Senate Finance and House Ways and Means committees outlined a proposal last week to permanently repeal the Medicare sustainable growth-rate formula and reform the fee-for-service system with a model that focuses on value over volume, though they offered no plan to pay for it.

Later in the week, Sen. Jay Rockefeller (D-W.Va.) pointed to legislation he introduced last spring to pay the estimated $139 billion cost of the repeal over 10 years by applying the Medicaid rebate to drugs covered for the approximately 9 million low-income Americans who are dually eligible for Medicare and Medicaid. The Pharmaceutical Research and Manufacturers of America opposes Rockefeller's plan.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and House Ways and Means Committee Chairman Dave Camp (R-Mich.) introduced a draft SGR repeal 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 would receive annual payment increases of 2%, while other professionals would receive 1%.

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. Agreeing to a pay-for is one of the biggest obstacles to repealing the SGR formula, since it likely would involve financial pain for powerful healthcare industry groups.

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