Lawmakers likely will take action to prevent a 5% reduction in Medicare physician reimbursements scheduled to take effect on Jan. 1, 2007, the AP/Seattle Post-Intelligencer reports (Bridges, AP/Seattle Post-Intelligencer, 7/26). At a hearing of the House Energy and Commerce Health Subcommittee, several House members on Tuesday called for an end to the Sustainable Growth Rate formula used to calculate Medicare physician reimbursements. The SGR formula each year establishes a target for Medicare spending on physician reimbursements, and, in the event spending exceeds the target, “excess spending continues to accumulate until it is recouped by reduced updates” to reimbursements, the Medicare Payment Advisory Commission said in written testimony presented at the hearing. “To work off this excess … the SGR will call for cuts of 5% every year for nine years,” MedPAC said. According to the Congressional Budget Office, replacement of the scheduled 5% reduction in Medicare physician reimbursements with an increase in payments that accounts for higher physician expenses would cost $218 billion over 10 years (Reichard, CQ HealthBeat, 7/25). The last time Congress did not take action to prevent a scheduled reduction in Medicare physician reimbursements was in 2002, when payments decreased by 4.8% (AP/Seattle Post-Intelligencer, 7/26). A Government Accountability Office report released on Friday said reductions in Medicare payments to physicians have not resulted in a decrease in the number of providers accepting Medicare beneficiaries or made it difficult for beneficiaries to find providers (Kaiser Daily Health Policy Report, 7/24).
Burgess Bill
Rep. Michael Burgess (R-Texas) on Monday introduced a bill (HR 5866) that would replace the SGR formula with an annual increase in Medicare physician reimbursements based on the amount of physician expenses as calculated in the Medicare Economic Index. The legislation would reduce the MEI by one percentage point, a move that would result in a 2.7% increase in Medicare physician reimbursements for 2007. In addition, the bill would establish a system for physicians to voluntarily report data on quality of care measures and would implement recommendations from the Institute of Medicine to help improve Medicare Quality Improvement Organizations — private contractors that CMS pays to investigate beneficiary complaints, evaluate quality and work with physicians and hospitals to improve care. Among other provisions, the bill would require QIOs to make information on their efforts to improve care available to all providers, would ensure a minimum funding level for QIOs and would require reviews of funding for QIOs when their responsibilities increase. The legislation also would eliminate the stabilization fund established under the 2003 Medicare law to encourage health insurers to offer prescription drug plans in underserved areas and would end a system in which reimbursements for certain medical education expenses are included in payments to Medicare Advantage plans. Burgess said that he has requested CBO estimates on the cost of the bill (CQ HealthBeat, 7/25).
Comments
Committee Chair Joe Barton (R-Texas) said, “I don’t believe we can continue this Band-Aid approach to fixing this recurring physician payment problem” (AP/Seattle Post-Intelligencer, 7/26). He added, “I want to reiterate: I think it is possible to fix the system, and I think it’s possible to fix it in this Congress, which means, in the next two months.” Subcommittee Chair Nathan Deal (R-Ga.) said that the bill “starts the discussion,” adding, “I certainly support moving forward” on Medicare physician reimbursement issues (CQ HealthBeat, 7/25). Rep. Michael Ferguson (R-N.J.) said the SGR formula is “fatally flawed, and it’s time we start writing its obituary today” (AP/Seattle Post-Intelligencer, 7/26). According to Burgess, the provision in the bill that would establish a system for physicians to voluntarily report data on quality of care measures would allow Medicare beneficiaries to “assess the level of quality their prospective doctors are achieving and decide which doctor they would prefer” (CQ HealthBeat, 7/25).
Hospital Reimbursements
Meanwhile, a lobbying campaign by medical device companies and hospital groups to prompt CMS to change a proposal that would revise changes to Medicare inpatient hospital reimbursements “appears to be paying off,” the Hill reports (Young, The Hill, 7/26). CMS in April announced the proposal, which includes the closure of loopholes used by specialty hospitals and a plan to replace the current charge-based reimbursement system with a cost-based system. Under the proposal, the cost-based reimbursement system would take effect in October, and severity-adjusted reimbursements — which would pay hospitals more for the treatment of sicker patients — would take effect in October 2007. The proposal would affect reimbursements for several inpatient procedures — such as those that involve the implantation of stents, defibrillators and other medical devices (Kaiser Daily Health Policy Report, 7/17). At least 245 lawmakers over the last two months have signed letters sent to CMS Administrator Mark McClellan that raise concerns about the proposal. In addition, Senate Finance Committee Chair Chuck Grassley (R-Iowa) and other lawmakers have requested that CMS delay implementation of the proposal. On Thursday, McClellan sent a response to a letter signed by Sen. Rick Santorum (R-Pa.) and 52 other senators. McClellan writes, “We are acutely aware of the disruptions that could occur if major changes are made too quickly or inappropriately.” CMS might release a final version of the proposal as early as Tuesday, according to the Hill (The Hill, 7/26).
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