House Subcommittee Initiates
Review of Medicare Physician Payment Methodology
May 7, 2004 - The AAMC submitted a statement
for the record at a May 5 House Energy and Commerce Health
Subcommittee hearing
on Medicare physician payments. The hearing was the first
in a series to address problems with the current Sustainable
Growth Rate (SGR) methodology used to calculate annual payment
updates.
MedPAC Chairman Glenn Hackbarth, CBO Director Douglas Holtz-Eakin,
and General Accounting Office (GAO) Healthcare Director Bruce
Steinwald testified regarding the development, flaws, and
impact of the current payment methodology. According to a
statement issued by full Committee Chairman Joe Barton (R-Texas),
the subcommittee will also meet with "physicians, seniors,
and relevant government agencies" on the issue.
Opening remarks from Subcommittee members indicated bipartisan
concern over the impact of reverting to the SGR methodology
in 2006, when payment relief provisions expire. When Rep.
Charles Norwood (R-Ga.) called the payment issue a "black
cloud on Medicare's horizon" that would significantly
limit access to care, Rep. Gene Green (D-Texas) concurred,
having recently heard escalating concerns from physicians
at Texas Medical Center in Houston.
Mr. Steinwald reported that service volume and intensity
was growing by 3 percent per beneficiary annually. The increases,
he added, were more expensive than the physician updates set
for CYs 2003, 2004, and 2005. GAO is studying the phenomenon
of service volume and intensity in its consideration of the
SGR methodology, as directed by the recently passed Medicare
prescription drug legislation.
CBO Director Holtz-Eakin reported that Medicare spending
on physician services will increase despite the SGR mechanism.
An increased range of benefits, rising costs for physicians,
and increased purchasing power among beneficiaries will promote
the spending growth. Subsequently, Congress should focus on
these factors when developing a plan to control spending on
physician services. Dr. Holtz-Eakin also provided an estimated
cost of $95 billion over 10 years if Congress were to tie
physician updates to the Medicare Economic Index (MEI), as
proposed by some physician advocates.
Commissioner Hackbarth reported that if the SGR were repealed,
Congress should still restrain spending on physician services.
He also criticized the current system for lacking physician
incentives that would contain the volume of physician services.
Despite their political sensitivity, Mr. Hackbarth suggested
that Congress consider the success of private plans in limiting
volume and intensity via physician incentives, standards of
care, refuting claims, and prior authorization for services.
The MedPAC Commissioners have requested an analysis of how
high-volume, highly discretionary imaging services could be
restructured to better control Medicare spending. Mr. Hackbarth
expected a final report on the analysis next year. He added
that Congress should consider "pay-for-performance"
as a way to improve Medicare efficiencies. Mr. Hackbarth also
agreed that the projected cuts in Medicare physician reimbursement
would, in the long-term, trigger significant access-to-care
issues.
Information:
Christiane Mitchell, Senior Legislative Analyst
AAMC Government Relations
cmitchell@aamc.org
(202) 828-0526
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