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Senate Finance Holds Second Roundtable Discussion Regarding SGR Reform

June 15, 2012—The Senate Finance Committee June 14 held the second in a series of roundtable discussions to examine Medicare physician payment system reform and learn about options to replace the sustainable growth rate (SGR) formula with new delivery models. The committee meeting titled, Roundtable Discussion on Medicare Physician Payment Policy: Lessons from the Private Sector, included  insurance companies describing ways they have transitioned away from fee-for-service to pay for performance programs.

Senate Finance Chair Max Baucus (D-Mont.) opened the hearing, saying, “Today, we will hear from five organizations that have developed innovative physician payment systems in the private insurance market. These organizations are changing how they pay physicians to create incentives that will improve patient care.”

Ranking Member Orrin Hatch (R-Utah) continued that “our current fee-for-service system provides little financial incentive to manage care properly.  Instead, the current incentive is to increase the volume of services.  Over the years, we have learned that more care does not necessarily mean better care, or better outcomes.”

Dana Safran, Sc.D., senior vice president, Blue Cross Blue Shield of Massachusetts, described their Alternative Quality Contract (ARQ) model that has five components that distinguish it from traditional contracts with providers. The components are: integration across a continuum of care; sustained partnership (five-year agreement); global budget financial structure with performance incentives and savings opportunities; performance measures; and data support.

When asked by Sen. Hatch for key components to delivery reforms for Medicare, Dr. Sanfran said that doctors alone cannot achieve the type of savings needed; they must be incentivized to organize together. She also added, “Of course not every physician…is ready for that kind of accountability today…sending a signal that that’s where we’re going, and by taking the initial step of having clinicians identify who is the other set of clinicians they are going to share accountability with.” She continued, “[F]or our physician fee schedule we have had… zero percent payment increases.” “[T]he only way to earn additional revenue is through your performance on a defined set of quality and outcome measures,” she said.

Darryl Cardoza, president and CEO, Hill Physicians Medical Group, San Francisco, Calif., testified that “Hill Physicians’ compensation plan for our physician network is primarily fee-for-service-based, but with some material innovations.”  Cardoza suggested that the committee should consider these elements when adapting to the Medicare system: Infrastructure  through “the use of sophisticated management, technology, intelligent use of data and interactive clinical-level communications;” allowing small, individual practices to participate; “[a]ppropriate incentives need to be in place to encourage patients to stay within a given network while preserving their ability to have reasonable choices;” and physician engagement with management support structure.

All witnesses agreed that there was a need for real-time data, and that primary care physicians should be at the heart of any organization, with support from nurses and other allied health care providers.

Other witnesses included: Peter Edwards, president of Provider Development, Humana, Louisville, Ky., Lonny Reisman, M.D., senior vice president and chief medical officer, Aetna, Hartford, Conn., and Chet Burrell, president and CEO, CareFirst BlueCross BlueShield, Washington, D.C.


Len Marquez
Director, Government Relations
Telephone: 202-862-6281


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