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Committee leaders propose new physician payment bill

November 8, 2013

Two key congressional committee leaders – one from each party – are offering a new bill to fix the way Medicare pays doctors by repealing the Sustainable Growth Rate (SGR). The bill would freeze current payment rates until 2023, but would create a new budget-neutral incentive pay program in 2017.

Leaders of the House Ways and Means and Senate Finance committees Oct. 31 released a discussion draft of a proposal, which does not specify a funding source. The proposal would mark a dramatic shift in physician payments, moving physicians from the traditional system in which they are paid for volume and instead using financial incentives to encourage them to move to alternative payment models emphasizing quality care.

After 2023, physicians and professionals who participate in an alternative payment model would receive an annual update of 2%, while all other physicians and professionals would receive an annual update of 1%.

Payment penalties under the Physician Quality Reporting System, Electronic Health Record (EHR) Incentive Program and Value-Based Modifier would sunset in 2016. Instead, the penalties that would have been assessed under those programs would fund a Value-Based Purchasing program under which physicians and other professionals would receive an incentive payment based on their performance on quality measures, resource use, clinical practice improvement activities and EHR meaningful use.

The proposal also would establish payment for complex chronic care management for physicians and other professionals practicing in a patient-centered medical home or comparable specialty practice, among other provisions.

For more on the proposal, click on:
http://tinyurl.com/lgq4yn9. The committees will accept comments on the proposal through Nov. 12.

The SGR formula, adopted as part of the deficit reduction law in 1997, will reduce Medicare physician payments by nearly 25% on Jan. 1 unless Congress intervenes. Stopping scheduled payment cuts caused by the SGR has become a yearly ritual on Capitol Hill, leading to physicians’ frustration with the system and a growing budget problem because each deferral increases the size and price tag of the next fix.

In the past, Congress has looked to cut hospital funding as a way to offset the annual increase in physician payments. For example, the “American Taxpayer Relief Act,” enacted Jan. 2, cut hospital funding by nearly $15 billion to help pay for a 12-month extension of the physician payment fix, which cost about $25 billion. While the AHA believes fixing the physician formula is essential, the association says it should not be done by cutting hospital payments and jeopardizing patients’ access to care.