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AHA urges Congress to reject hospital cuts as a way to fix physician payments

November 22, 2013

The AHA last week urged congressional health care leaders to reject cuts in hospitals’ Medicare payments as a way of improving Medicare payments to physicians.

Leaders of the House Ways and Means and Senate Finance committees 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.

Markup scheduled. The Senate Finance Committee yesterday anounced that it will begin marking up the proposal Dec.

12 “While averting a cut in payments to physicians is essential, it should not be financed by reducing payments to hospitals,” AHA Executive Vice President Rick Pollack Nov. 13 wrote members of the two committees.

Pollack’s letter responded to the committees’ request for comments on their draft proposal for
revamping the Medicare physician payment system.

The committees’ “discussion draft,” released Oct. 3, 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%.

The proposal circulated by Ways and Means and Finance is similar to the “Medicare Patient Access and Improvement Act,” H.R. 2810, which was approved by the House Energy and Commerce Committee on July 31.

That legislation also does not include financial offsets. The Congressional Budget Office in September estimated it would
cost $175.5 billion over 10 years to pay for the proposal.

“We remain strongly opposed to additional cuts that could be harmful to hospitals’ ability to fulfill their mission of caring,” Pollack wrote committee members. While the AHA supports the “general direction” of the proposal, he said the association has “concerns about specific proposals, such as the details of alternate payment models, streamlining quality measures, impact on medical specialties, and potential offsets. In addition, permanent Medicare physician payment reform should remove barriers to clinical integration of health providers, and include medical liability reform.”

Temporary patches. 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. Physicians face a 24.4% reimbursement cut in January unless Congress acts to replace the SGR or adopt another temporary fix.

In the past – as Pollack noted in his letter – 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 inpatient Medicare payments by nearly $11 billion to help pay for a 12-month extension of the physician payment fix, which cost about $25 billion.

“The AHA will continue to work with Congress to find a permanent solution to the Medicare physician payment problem,” Pollack stated. But he said hospital cuts would jeopdardize patients’ access to care.

For more on the AHA’s letter, click on:

http://tinyurl.com/myyt5cu.

The committees’ draft proposal also would establish payment for complex chronic care management for physicians and other professionals practicing in a patientcentered medical home or comparable specialty practice, among other provisions. For more on the proposal, click on: http://tinyurl.com/lgq4yn9.