Skip to Content

Filter by:

Washington Highlights

House Committee Discusses Medicare Payment Innovations and SGR

July 20, 2012—The House Energy and Commerce Health Subcommittee July 18 held a hearing to discuss Medicare physician reimbursement payment innovations to transition away from traditional fee-for-service (FFS) and the sustainable growth rate (SGR) formula.

Subcommittee Chair Joe Pitts (R-Pa.) opened the hearing with a reminder that “[t]ime and again, Congress has had to override scheduled cuts in physician reimbursement to avert disaster. And, we will have to do it again before the end of this year.  Absent Congressional action, physicians will face a 27 percent cut starting January 1, 2013.”

Energy and Commerce Chair Fred Upton (R-Mich.) said he believes the path Congress should take would be “[f]irst, we need to repeal the SGR and put an end to this perpetual cycle of payment instability and threatened access to care. Next, we need to introduce incentives that will encourage physicians and other providers to deliver care that results in better patient outcomes, maintains access to needed medical services for beneficiaries, pays providers adequately and fairly, and reduces the rapid growth in spending in the Medicare program.”

Energy and Commerce Ranking Member Henry Waxman (D-Calif.) agreed with Chairman Upton that “[w]e must work towards a new way of paying for care, for both physicians and other providers, that encourages integrated care – improving care for individuals, improving care for populations, and reducing costs.”

Mirroring the conversation the week before at the Senate Finance Committee roundtable [see Washington Highlights, July 13], a recurring theme was the usefulness of data and its effect on both quality and efficiency. Kavita Patel, M.D., M.S., managing director for Clinical Transformation and Delivery, Engelberg Center for Health Care Reform, Brookings Institution, said, “Perhaps the biggest tool we can give physicians to drive care quality and cost savings is relevant, timely, actionable data about their patient populations—both clinical and financial.”

Scott Serota, president and CEO, BlueCross and BlueShield Association, also testified that “[c]hanging payments alone will not transform care if clinicians lack the means to identify and implement best practices.  Giving clinicians sophisticated information systems and IT tools will not optimize health value if incentives are not realigned to favor outcomes, not volume.  Neither changing payments nor partnering with clinicians will achieve its full potential if patients are not engaged in helping to manage their own health and care.”

Members on both sides of the aisle agreed that a replacement for the SGR was unlikely before the Jan. 1 deadline and there was a need to enact some type of long-term “patch” to give providers time to test and implement new payment models. However, Republicans and Democrats disagreed on how to pay for any extension during the transition.

Rep. Michael Burgess, M.D. (R-Texas) announced he would introduce a bill July 18 that would extend the current payment rates through 2013.  However, it does not include a way to pay for the extension, which will cost more than $316 billion over 10 years. “This term, I’ve seen more work done on this problem than I have any other time that I have been in Congress, but we’re still pretty far away from the goal that we all expect to achieve,” Rep. Burgess said.

Subcommittee Ranking Member Frank Pallone, Jr. (D-N.J.), said he agreed with Rep. Burgess, but warned that “we always have to be careful when we talk about pay-fors,” and that defunding the Affordable Care Act (ACA, P.L. 111-148 and P.L. 111-152) was not an option for Democrats.


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


envelope on a green background

Subscribe to Washington Highlights

RSS icon

Subscribe to RSS

Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

Past Issues

For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806