Ways and Means Subcommittee
Reviews Medicare Physician Payments
March 1, 2002 - The AAMC and other provider witnesses
submitted testimony
for the record at a Feb. 28 House Ways and Means Health Subcommittee
hearing regarding the Medicare physician payment update and
Sustainable Growth Rate (SGR) methodology. The testimony stated
that Congress must address the short- and long-term problems
associated with the SGR formula to assure adequate payment
levels and maintain beneficiary access to services. The Ways
and Means hearing came two weeks after the House Energy and
Commerce Subcommittee on Health held a hearing on the same
issue [see Washington Highlights,
Feb. 15].
Among the witnesses testifying were Dan Crippen, director
of the Congressional Budget Office (CBO) and Glenn Hackbarth,
chairman of the Medicare Payment Advisory Commission (MedPAC).
Mr. Hackbarth reiterated MedPAC's recommendations to repeal
the SGR methodology and update physician payments using a
methodology similar to that used for hospitals (i.e., "based
on the estimated change in input prices for the coming year,
less an adjustment for growth in multifactor productivity").
According to Mr. Crippen's testimony, the CBO estimates the
cost of MedPAC's recommendations at $126 billion over 10 years.
Mr. Crippen agreed that the SGR has produced volatile updates.
However, until 2002, the SGR methodology had actually "tended
to be to the benefit of physicians." Mr. Crippen also
advised that MedPAC's recommendations to eliminate spending
targets would trigger "large spending increases driven
by volume." Those increases, Mr. Crippen warned, would
require "reduced spending elsewhere in the budget, higher
taxes, or larger deficits." When Ranking Minority Member
Fortney "Pete" Stark (D-Calif.) asked Mr. Crippen
and Mr. Hackbarth to identify potential budget offsets, Mr.
Crippen responded by suggesting cuts to hospital payments.
Earlier in the hearing, Rep. Stark had asked his colleagues
to carefully consider the appropriateness of physician payment
increases within the context of the Subcommittee's other obligations.
Specifically, he asked whether it was appropriate to focus
on increasing already substantial physician incomes (which,
Rep. Stark added, were further enhanced by last year's tax
cut), rather than assisting poor children without health insurance
or low-income seniors unable to afford prescription drugs.
Throughout the hearing, witnesses reported anecdotal evidence
of physicians reducing Medicare services because of inadequate
payments. John Mayer, M.D., a thoracic surgeon and professor
of Surgery at Harvard Medical School, expressed concern that
poor Medicare reimbursement could be one of the driving forces
behind declining medical school enrollments and growing vacancies
in residency and fellowship programs.
Despite Mr. Crippen and Rep. Stark's remarks, and Rep. Jim
McDermott's (D-Wash.) later remark that the Committee would
not pass a bill that costs $126 billion, Chairman Nancy Johnson
(R-Conn.) announced her intent to include physician payment
provisions in a larger Medicare modernization and drug benefit
bill which she anticipated later this session. Rep. Johnson
also criticized the Senate for failing to hold any hearings
regarding the physician payment update and other Medicare
issues.
The AAMC statement includes data that show how the impact
of the physician payment reductions will exceed 5.4 percent
in several Medicare-related specialities.
Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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