Permanent “˜Doc-Fix’ Isn’t Happening, and Short-Term Solution Isn’t Ready

Time is running out to avert a 20 percent cut in Medicare payments to doctors.

Senate Finance Committee Chairman Max Baucus(D-MT) speaks during a hearing on health insurance exchanges on November 6, 2013 in the Dirksen Senate Office on Capitol Hill in Washington, DC.
National Journal
Clara Ritger
Dec. 10, 2013, 7:50 a.m.

A per­man­ent re­peal of the Sus­tain­able Growth Rate for­mula — the flawed pay­ment mod­el for Medi­care phys­i­cians — won’t hap­pen be­fore the hol­i­day re­cess, ac­cord­ing to an of­fi­cial with the House Ways and Means Com­mit­tee.

With a per­man­ent solu­tion off the table, the House is now tasked with act­ing on a short-term “doc-fix” be­fore ad­journ­ing. If no change is made, phys­i­cians who provide ser­vices to Medi­care be­ne­fi­ciar­ies will face a 20 per­cent pay cut start­ing Jan. 1.

But though the House is slated to leave Fri­day and the Sen­ate shortly there­after, of­fi­cials in both cham­bers say the lan­guage to stop the re­im­burse­ment drop is yet to be fi­nal­ized.

Law­makers had been gun­ning for a per­man­ent solu­tion to the SGR pay­ment mod­el, which re­quires an­nu­al cuts to Medi­care re­im­burse­ments to bal­ance fed­er­al spend­ing with in­take. Since 2003, Con­gress has passed 15 “doc-fixes” to stop the cuts from tak­ing ef­fect. It’s an ex­pens­ive or­deal, adding up to a grand total of $150 bil­lion, which is why there was op­tim­ism about a per­man­ent solu­tion after the Con­gres­sion­al Budget Of­fice’s cost eval­u­ation came in re­l­at­ively low earli­er this year. On Fri­day, the cost dropped even fur­ther to $116.5 bil­lion.

But with time run­ning out, those hop­ing for a per­man­ent fix will have to settle for in­cre­ment­al pro­gress: The Sen­ate Fin­ance Com­mit­tee is sched­uled to mark up a bill aimed at an even­tu­al per­man­ent fix Thursday, and the House Ways and Means Com­mit­tee could do the same.

Draft lan­guage of the House Ways and Means ver­sion shared with Na­tion­al Journ­al in­dic­ates that the re­peal of the SGR would be re­placed by a value-based per­form­ance in­cent­ive pro­gram. Phys­i­cians’ 2013 pay­ment rates would con­tin­ue through 2023, when an an­nu­al 1 per­cent in­crease would take ef­fect (2 per­cent for phys­i­cians who par­ti­cip­ate in tests of new pay­ment mod­els).

Be­gin­ning in 2017, though, phys­i­cians’ pay­ments would be ad­jus­ted based on four per­form­ance met­rics: qual­ity of care, budget-neut­ral re­source use, mean­ing­ful use of elec­tron­ic health re­cords, and clin­ic­al-prac­tice im­prove­ment activ­it­ies. Im­prove­ment from one year to the next would be taken in­to ac­count when de­term­in­ing in­creases and de­creases in pay.

Fund­ing for value-based sys­tem will in­crease over time, from 4 per­cent of spend­ing in 2017 and max­ing out at 12 per­cent in 2021. Phys­i­cians can qual­i­fy for gains and losses less than or equal to the total spend­ing per­cent­age of that year.

The pro­pos­al also grants the Health and Hu­man Ser­vices De­part­ment the power to re­view of the cost of ser­vices, to es­tab­lish cri­ter­ia for evid­ence-based care, and to cre­ate a sys­tem for Medi­care pa­tients to re­view past per­form­ance of phys­i­cians.

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