With an eye toward formulating a legislative proposal, key House health committees have asked physician groups for feedback by Feb. 25 on how to create a new Medicare physician payment system to replace the sustainable growth rate (SGR) system that over the past decade has triggered negative fee updates which Congress has blocked with a series of short-term fixes. A one-page questionnaire, circulated by the committees on Ways and Means and Energy and Commerce, asks how different medical specialties should be rewarded financially under a performance-based system and how a quality reporting system should be crafted to replace the one now used by the Centers for Medicare and Medicaid Services (CMS). The questionnaire is in follow-up to a three-phase reform outline released earlier that would repeal the SGR and freeze physician fees for an unspecified period during the transition to a payment system based on physician-endorsed quality measures and efficiencies achieved in providing care.
Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, predicted Feb. 13 that legislation repealing Medicare’s current physician payment system would be on the House floor before the August congressional recess. “Fixing this issue is one of our No. 1 priorities in this Congress, and our goal is to get it done this year,” he told an American Medical Association conference.
Separately, a bipartisan bill (H.R. 574) has been introduced in the House by Reps. Allyson Schwartz (D-Pa.) and Joseph Heck (R-Nev.) that would replace the SGR. It would keep current physician payment levels through 2014 while CMS tests new coordinated care models for reimbursement over the next five years as an alternative to traditional fee-for-service Medicare. From 2015 to 2018 physician payments would increase annually by 2.5 percent for primary care doctors and 0.5 percent for all other doctors. Afterward, physicians would have to adopt a replacement model approved by CMS. Schwartz and Heck proposed similar legislation in the last Congress (H.R. 5707), but unlike that measure, their new bill would not offset the cost of SGR repeal by tapping unused war expenditures from the Overseas Contingency Fund, instead leaving open the question of how to pay for such reform. The cost of SGR repeal has been a major obstacle to physician payment reform in the past, but a new estimate from the Congressional Budget Office (CBO) has raised hopes that this could be overcome. On Feb. 5, CBO said that freezing physician fees over the 2014-2023 period would cost $138 billion versus its previous estimate of $245 billion. Where the money would come from, however, is an issue that SGR repeal proponents have yet to address. The SGR was enacted in the 1997 Balanced Budget Act as a mechanism to control the rate of growth in Medicare spending for physician services. It limits the yearly increase in costs per beneficiary to the growth rate in the nation’s gross domestic product. If the target is exceeded, this triggers a reduction in the physician fee update formula. It is also unclear whether any effort to change the Medicare physician payment system would advance as stand-alone legislation or as part of a larger legislative vehicle.