Tag Archives: doc fix

Change to Medicare will shift physicians into value-based payment

President Obama signed the Medicare Access and CHIP Reauthorization Act of 2015 into law on Thursday afternoon, in what experts say could be the most significant change in Medicare’s 50-year history.

The law, part of a bipartisan deal to eliminate the Sustainable Growth Rate (SGR) formula that Congress had used to set physician payment rates under Medicare, shifts the 50-year-old program away from a fee-for-service model and moves physicians into value-based payment.

Earlier this week the U.S. Senate passed the Medicare Access and CHIP Reauthorization Act of 2015 by a vote of 92 to 8. Last month, the House passed its version of the bill by 392-37. Continue reading

As it considers SGR fix, Senate weighs fundamental shifts to Medicare

Image by 401(K) 2012 via Flickr

Image by 401(K) 2012 via Flickr

After voting to eliminate the Sustainable Growth Rate (SGR) formula last week, the U.S. House of Representatives sent the measure to the U.S. Senate where the bill’s fate is uncertain. When the Senate recessed on Friday without considering the bill, H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015, it pushed off a vote until mid-April.

The bill’s supporters were hoping for a Senate vote last week because, as Jennifer Haberkorn, of Politico Pro, and Mary Agnes Carey explained for Kaiser Health News, the Senate’s return date of April 13 leaves two weeks for those who like the bill and those who don’t to gather support and consider their options.

“Traditionally in Washington, the more time you have, the more opportunity there is for opposition to fester. That should be a concern in this case because it is two weeks before the Senate returns,” Haberkorn said. Continue reading

Medicare ‘doc fix,’ passed by House, shifts some costs to seniors

Image by 401(K) 2012 via Flickr

Image by 401(K) 2012 via Flickr

The U.S. House of Representatives passed H.R. 2 on Thursday, a bill that would prevent an automatic cut of 21 percent in Medicare payments to physicians and would require seniors to pay more in the form of higher copayments and premiums. The Medicare Access and CHIP Reauthorization Act of 2015 also would extend the Children’s Health Insurance Program (CHIP) for two years through 2017.

The vote was hailed as a step forward for physicians because it eliminates the formula Congress has used for many years to increase payments to physicians. That formula, called the sustainable growth rate (SGR), was renegotiated annually and usually at the last minute. It’s been replaced with an annual payment increase of 0.5 percent. The vote was 392 to 37, including 212 Republicans and 180 Democrats voting in favor, according to Govtrack.us.

The strong support from both Republicans and Democrats puts pressure on the U.S. Senate to approve the bill, before Congress adjourns on Friday, Paul Demko wrote in Modern Healthcare. Continue reading

Key congressional committees agree on ‘Doc Fix’

An agreement has finally been reached in both houses of Congress that replaces the Medicare physician sustainable growth rate formula, or SGR, with plan that provides stable funding updates based pay-for-performance and increases reimbursements by 0.5 percent annually for the next five years. The SGR, part of the 1997 Balanced Budget amendment, essentially ensured that the yearly increase in the expense per Medicare beneficiary does not exceed the growth in GDP.

However, as health care costs began to outpace inflation, the SGR began to fall short of the actual cost of health care services and Congress has repeatedly stepped in to suspend or adjust the payments (“doc fix”). Many physicians groups, including the AMA, have called for a more permanent, less formulaic, solution. Continue reading

‘Doc fix’ flies in the face of rewarding quality, not quantity, of treatment

One of the last things that Congress did before finally getting out of town a few days before Christmas was the so-called “doc fix” – finding money to stave off a scheduled cut for Medicare physician payments. But they only did it for two months – meaning lawmakers will come back in January and struggle with it all over again.

The uncertainly, coupled with the prospects of what, on paper at least, could be a 27 percent fee cut, raises questions about whether more physicians will start cutting back on the number of Medicare patients they take, or dropping out of the program altogether.

Joanne KenenJoanne Kenen (@JoanneKenen) is AHCJ’s health reform topic leader. If you have questions or suggestions for future resources, please send them to joanne@healthjournalism.org.

It’s also worth reflecting on what this Medicare payment system (formally known as the Sustainable Growth Rate or SGR) means – because it reinforces the very heart of fee-for-service medicine at a time when the health reform law, and many large employers and insurers, are supposedly trying to nudge the health care system away from fee-for-service, which encourages volume. The goal is to move toward new models of more coordinated and integrated care that are supposed to promote value.  So the irony is that we’re tying ourselves in knots about SGR – which pays doctors for how much they do – when the focus is supposedly on creating a system that rewards doctors for how well they do. Go figure.

The SGR dates back to one of those sprawling congressional budget deals, back in 1997. It is supposed to link Medicare physician costs to larger economic and population trends. But the formula didn’t work. Everyone in Washington has pretty much agreed on that. But they haven’t agreed on how or when to replace it. There’s been a lot of talk about coming up with a “doc fix” for a couple of years to allow time for a transition to a TBD new system. But that’s a tall order, given that all the parties don’t agree on what a new system should look like, or which of the new payment systems and incentives being tested are going to turn out to work well (and how long it may take to get them working.)

Until 2002, payments under the SGR rose modestly. Then in 2002 physician Medicare fees were cut by 4.8 percent. In subsequent years, Congress (heavily lobbied by physician groups) postponed the cuts called for by the SGR formula, or approved modest fee hikes. Now, the cumulative postponements mean that doctors face a 27 percent cut – and erasing it would cost about $300 billion over a decade. payments have grown very modestly for nearly a decade now. On top of the SGR issue, physicians and all other Medicare providers face a 2 percent cut starting in 2013 under last summer’s deficit-reduction agreement.

The Medicare Payment Advisory Commission, or MedPAC, knows a mess when it sees one.

The system … has failed to restrain volume growth and, in fact, may have exacerbated it,” MedPAC wrote to Congress earlier this year, recommending yet again that the formula be jettisoned. To a certain extent, cutting physician payments for specific services only encourages them to offer more services.  There isn’t an expert consensus on exactly how much or precisely how the SGR system stimulates more volume. But a recent New England Journal of Medicine article found that doctors in some states were digging the SGR hole much deeper than others (Florida, Texas and New York being among the major culprits). And some specialties’ “excess growth” is much more than others (these include internal medicine, cardiology, diagnostic radiology, and family practice – some of which I would not have guessed.) This doesn’t mean that fees should be slashed in some states and not others, or that family practitioners should get a pay freeze while neurosurgeons make even higher incomes. But it does suggest, as the Harvard health policy experts that wrote the NEJM piece note, that new systems, less blunt and less arbitrary, are required.

The congressional focus on short-term “doc fixes” – a decade’s worth now – blunts the momentum for permanent change. “If you are always doing a fire drill, and finding a perpetual one-year patch, it keeps you from confronting the larger mega-reform that’s needed,” Tom Miller of the American Enterprise Institute observed.

The AMA and other physician groups have warned for years that more and more physicians will stop treating Medicare beneficiaries. On an online AMA survey in 2010, one in five doctors overall, and nearly one-third of primary care doctors, said they are already limiting Medicare patients.

So while Congress struggles for a way out, it’s probably a good time to look at what physicians are doing in your state. (This AMA guide to choices doctors can make about Medicare participation may be useful.) I suspect a lot of doctors don’t quite understand what’s going on in Congress (because as we saw during the pre-Christmas impasse, Congress didn’t seem to quite understand what’s going on in Congress.)

  • Do physicians think they will actually get a 27 percent cut? (They won’t – but they may not get an increase or only a modest one.)
  • Are they preparing to drop Medicare patients or at least take fewer new ones?
  • Have they begun to understand why the system is unsustainable, and become increasingly open to alternatives including ACOs, bundling, medical homes, etc?
  • Are they coming up with any creative local solutions? Or are they just assuming that somehow the system can keep muddling through indefinitely?