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House Hearing Discusses Reforms to Medicare Physician Payment

February 15, 2013—The House Energy and Commerce Health Subcommittee held a Feb. 14 hearing titled “SGR: Data, Measures and Models; Building a Future Medicare Physician Payment System” that focused on repealing and replacing the current Medicare sustainable growth rate (SGR) formula with a new payment system that will curb the growth of spending.

Energy and Commerce Chair Fred Upton (R-Mich.) and Ways and Means Chair Dave Camp (R-Mich.) Feb. 7 released a framework of their collaborative efforts to repeal the SGR formula and advance a permanent solution for paying physicians.

The committees’ framework provides little detail, but proposes a three-phase approach that would “repeal the Medicare SGR formula and provide for a period of predictable payment rates; reform Medicare’s fee-for-service (FFS) payment system to better reflect the quality of care provided; and further reform Medicare’s FFS payment system to also account for the efficiency of care provided.”

The framework also overrides the current CMS quality measurement programs, such as the Physician Quality Reporting System (PQRS), to “align Medicare payment initiatives with private payer initiatives.”

Chairman Upton opened the hearing by referring to the SGR repeal framework saying, “This is a top priority. As we move closer to this goal, I am confident that we can make this a bipartisan effort.”

Health Subcommittee Chair Joe Pitts (R-Pa.) said, “In thinking about the proper payment policy, there seems to be fairly widespread agreement that certain elements are needed to build that system, physicians, payers and other stakeholders need access to reliable data that can be used to improve the value of health care.”

In his opening statement, Ranking Member Henry Waxman (D-Calif.) suggested, “Our challenge is to judiciously balance the many competing interests in our health care system.  I believe that we need to approach this discussion with physicians as our partners, but we also need to ensure that other health care stakeholders, including beneficiaries and non-physician providers, have input as well.”

Subcommittee Ranking Member Frank Pallone expressed his belief that the cost to repeal the SGR should not come only from Medicare and other providers. He suggested that the excess funding from the Overseas Contingency Operations (OCO) budget should be used to pay for the $138 billion cost of repeal.

In a line of questioning to Medicare Payment Advisory Commission (MedPAC) Chair Glenn Hackbarth, Chairman Pitts cited AAMC workforce shortage data for both primary care and specialists.  He commented that “if the goal is to increase the primary care workforce by making primary care more attractive to medical school students, do you think a few years of modest payment increases will do this? How does this address the projected shortage of specialists?”

Mr. Hackbarth noted there are a series of things that need to be done to improve payment for primary care and increase the chances of students choosing a primary care career. One step is to change how the relative value units are calculated in the physician fee schedule. The second is to add codes to the fee schedule for services such as care coordination, and management of conditions. Third, increase reimbursement. Fourth, move to new payment models. Lastly, address graduate medical education (GME) and the need to increase the number of Medicare-funded GME slots. He said MedPAC would urge that there should be an adequate number of any new slots that are devoted to primary care.  Finally, Mr. Hackbarth made clear that primary care is not the only specialty in shortage and “is not the only specialty that matters to Medicare patients— all of the specialties play an important role in high quality care.”

During the second panel, members heard from witnesses, including Harold D. Miller, executive  director, Center for Healthcare Quality and Payment Reform; Elizabeth Mitchell, CEO, Maine Health Management Coalition; Robert Berenson, M.D., fellow, Urban Institute; and Cheryl L. Damberg, Ph.D., senior policy researcher, Pardee RAND Graduate School, on a variety of issues focusing on data and quality measures. Dr. Berenson noted the limitations and technical difficulties of assigning quality and cost to physicians.  He recommended focusing on outliers rather than developing a relative score for all physicians.


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


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