WASHINGTON – A plan to finally replace Medicare’s much maligned Sustainable Growth Rate payment formula could be unveiled by this summer, federal lawmakers predicted at a committee hearing on May 5.
"Here’s the bottom line: If we get to December and we’re doing an extension, that’s a failure on our part," Rep. Michael Burgess (R-Tex.) said at the hearing of the House Energy and Commerce Committee’s Subcommittee on Health. "We need a permanent solution that’s predictable, updatable, and reasonable for this year – and nothing else will do."
Photo credit: American Medical Association
From left: Dr. Mark B. McClellan, Dr. Cecil B. Wilson, Dr. David B. Hoyt, and Harold D. Miller.
"Whatever virtues the SGR had when it was created 14 years ago, ... it’s clear that they have vanished," noted Rep. Henry A. Waxman (D-Calif.). He added that in the past 2 years, Congress has had to pass legislation six times, blocking fee cuts of up to 21% or more.
Approximately 30 medical associations responded to the House subcommittee’s request for suggestions and proposals in developing a new system. Speaking Thursday with a five-person panel of experts from medical associations and health policy organizations, House subcommittee members considered alternatives to the current SGR formula, which some participants labeled as anything but sustainable.
One Size Won’t Fit All. While the details of the plans vary, they do show a consensus on several fronts: repealing the SGR, moving away from the traditional fee-for-services payment model, and providing a 4- to 5-year transition period in which providers can experiment with a variety of payment systems.
The expert panel also stressed the importance of avoiding a "one size fits all" solution.
"I think we should also have a realization that what will work in one part of the country will not work in another part of the country, and that’s why we have continued to talk about a variety of options," said Dr. Cecil B. Wilson, president of the American Medical Association. "There is a temptation to feel like we ought to figure out one rule ... that solves it all."
Dr. Wilson pointed to the provisions in the Affordable Care Act that allow for a variety of models of accountable care organizations, embodying the concept of options in the medical system. In that spirit, Dr. Wilson said that the AMA has formed a physician leadership group to evaluate the effectiveness of alternative payment methods.
"The evidence shows that to achieve the savings that Congress is looking for, and to improve the quality of health care delivered to millions of patients in the country, reform must include investment in primary care," Dr. Roland A. Goertz, president of the American Academy of Family Physicians, noted in written testimony to the committee.
To strengthen primary care’s role in Medicare, the AAFP backs payment reforms that would boost primary care reimbursement and support the concept of the patient-centered medical home (PCMH). The AAFP’s proposal would create a blended reimbursement system for primary care delivered within a PCMH: fee-for-service payments and pay for performance, plus care management fees for PCMH-related activities that don’t involve direct patient care.
To prepare for that new payment system, the AAFP has proposed a 5-year transition period with mandated pay increases for primary care physicians, an increase in the Primary Care Incentive Care payment from 10% to 20%, and a rule that Medicaid payments to primary care physicians will always be at least equal to Medicare payments.
Dr. David B. Hoyt, executive director of the American College of Surgeons, said the college is analyzing the use of bundled payments for surgery. Dr. M. Todd Williamson, of the Coalition of State Medical and National Specialty Societies, introduced the option of private contracting, in which patients would be free to apply their benefits to a doctor of their choice, who would be free to opt out on a per-patient basis.
"Private contracting is a key principle of American freedom and liberty," Dr. Williamson said. "[It] will help the federal government achieve fiscal stability while fulfilling its promise to Medicare beneficiaries."
Harold D. Miller, executive director of the Center for Healthcare Quality and Payment Reform, suggested an episode-of-care payment plan through which hospitals and physicians jointly charge one price for all services included in a hospitalization. The model would also include a warranty stating that any infections or complications would be treated at no additional cost. Also, a physician practice would receive one payment for all patient needs associated with chronic diseases or other conditions.
Rep. Burgess, who is also a doctor, said organizations should focus on ways to address patients with chronic conditions, adding that 80% of Medicare funding is spent by 20% of beneficiaries with chronic illnesses.