Congress Moves Closer to Changing How Medicare Pays Doctors

Does Congress expect a permanent change to the way doctors are paid under Medicare will soon be adopted?  It would appear that they do.  The adoption of the Bipartisan Budget Act of 2013 suspended the update to the sustainable growth rate (SGR) formula for calendar year (CY) 2014 for only three months.  In years past Congress suspended the update for the entire year.  This short-term suspension combined with the adoption of similar legislation changing how Medicare pays doctors by both the Senate’s Finance Committee and the House’s Ways and Means Committee has the tea-leaves lining up to indicate that a permanent change  may be coming as to how Medicare pays physicians and that change maybe soon.

House and Senate proposals. Both committees approved language on December 12, 2013 for consideration by the full Senate and the House of Representatives that make similar changes in how physicians are paid.  The bill approved by the House’s Ways and Means Committee would:

  • increase payments to physicians and medical professional paid under the physician fee schedule by 0.5 percent a year in 2014, 2015, 2016 and 2017;
  • provide for no increase in payments to physicians and medical professionals for years 2018, 2019, 2020, 2021, 2022, and 2023;
  • provide a 5 percent bonus to physicians who use a qualifying alternative payment model;
  • combine current payment incentive programs into one value-based program; and
  • allow physicians to automatically renew their two-year opt out for Medicare beneficiaries who privately contract with their physician for the provision of services.

The version of the bill approved by the Senate Finance Committee would have no increase in payments for three years, but would than base payments on participation in the value-based program.

In addition, the legislation would adopt criteria for when the use of advanced diagnostic imagining is appropriate, require that electronic health records maintained by electronic health record vendors interoperable by 2017, and increase the public availability of provider payment data. The House’s Energy Committee approved of the legislation on November 12, 2013.

Support. The American Medical Association (AMA) voiced its support for both pieces of legislation. Dr. Ardis Dee Hoven, President of the AMA said,  “The American Medical Association strongly commends members of the House Ways and Means Committee and the Senate Finance Committee for the tremendous progress they have made towards repealing Medicare’s failed Sustainable Growth Rate (SGR) formula and creating a stronger Medicare program.” Senator Max Baucus (D. Mont.), Chairman of the Senate’s Finance Committee, included in his statement the comments of Dr. Michael Brown of the Montana Medical Association who said, “this bill moves Medicare to a viable payment formula that will bring stability  to physician  practices and help maintain access for our senior citizens.”   The AMA was joined by the American Osteopathic Association, the American Academy of Family Physicians, the American College of Radiology, and the American College of Cardiology in supporting the bill according to a statement from Senator Orin Hatch ( R. Ut.) the ranking minority member on the Finance Committee.

SGR formula. The SGR was adopted in 1999 as the target-setting factor in the Medicare physician fee schedule conversion factor update formula.  It is the way updates to the physician fee schedule are determined. The SGR is linked to changes int he U.S. gross domestic product. It is based on a formula at Soc. Sec. Act sec. 1848 (f)(2) that includes the following factors; (1) the estimated weighted average percentage increase in the fees for all physicians’ services; (2) the estimated percentage change in the average number of Part B beneficiaries from the previous year; (3) the estimated percentage growth in the real per capita GDP from the previous year; and (4) the estimated percentage change in expenditures for all physicians’ services that are attributable to changes in laws and regulations.

Annual suspension. Every year since 2002, Congress has adopted legislation suspending the pending cuts the SGR would have required to payments to physicians and other providers.  Since than Congress has adopted 15 pieces of legislation suspending pending cuts to reimbursement. The Bipartisan Budget Act of 2013 cancelled the 20.1 percent reduction in payments to physicians and other health care professional paid under the SGR formula scheduled for 2014, but for only three months. Is this the last cancellation of the update calculated by the SGR formula for the updating of reimbursement under the physician fee schedule?

The SGR repeal and replacement legislation is expected to be considered by both the Senate and the House when they return in 2014.  While they have an incentive to complete work on this legislation by March 2014, when the SGR cuts will be put in place under provisions of the Bipartisan Balanced Budget Act of 2013, another extension is possible if work is not completed by that time. So while the bipartisan Balanced Budget Act of 2013 might not be the last piece of legislation to suspend the draconian cuts in the way doctors are paid, Congress may have found a way out of this annual legislative exercise to suspend the rate reduction determined by the SGR.