Any legislative approach to fixing Medicare's sustainable growth rate system “would be prohibitively expensive,” according to House Ways and Means Chair Bill Thomas (R-Calif.).
Attaining a permanent fix is possible, however, provided that Congress and the Bush administration work on efforts to combine administrative and legislative actions, Rep. Thomas and Rep. Nancy L. Johnson (R-Conn.), health subcommittee chair, wrote in a letter to Mark McClellan, M.D., administrator of the Centers for Medicare and Medicaid Services (CMS).
The proposal is one of several ideas floating in Congress that seek to fix the Medicare physician fee schedule, as physicians face a looming 4.3% cut to their reimbursement in 2006.
CMS actuaries project negative payment updates of minus 5% annually for 7 years, beginning in 2006, if the flawed sustainable growth rate (SGR) is not corrected.
CMS could do its part by removing prescription drug expenditures from the baseline of the SGR, something it should have the authority to do, the letter suggested. Because drugs aren't reimbursed under the fee schedule, it's illogical to include them in the expenditure total when calculating the schedule's update.
The agency should also account for the costs of new and expanded Medicare benefits, which are included in the SGR calculation, the letter stated.
On a legislative fix, Rep. Thomas wrote that “the time is ripe” to tie physician payments to quality performance. CMS demonstration projects on performance-based payments in Medicare “will provide us with the experience we need to design appropriate rewards for delivering quality care,” he wrote.
At press time, Rep. Johnson was prepping to introduce a pay for performance bill that would repeal the SGR and base future updates for physician payments on the Medicare Economic Index (MEI).
At a recent hearing, Dr. McClellan informed Rep. Johnson that such a measure could come at a high cost: specifically, that MEI-based increases would be $183 billion over 10 years.
CMS in the meantime is working hard to remove Part B drugs from the formula, although the procedure “presents difficult legal issues that we haven't yet been able to solve,” Dr. McClellan said. It also would not solve the entire problem, as positive updates would not take place for several years, regardless of whether CMS removed drugs prospectively or retrospectively, his testimony indicated.
In addition, he cautioned Rep. Johnson's subcommittee that removal of drugs would increase beneficiary premiums.
Physician groups offered support for this legislative approach at the hearing. “We're committed to improving quality of care, but to make further quality improvements physicians must be adequately reimbursed for treating Medicare patients,” John H. Armstrong, trustee to the American Medical Association, testified.
Leaders on the Senate Finance Committee have since introduced a pay-for-performance bill, although it may not get the same kind of support from physician groups as the forthcoming Johnson bill.
Applying the notion that Medicare should attain better “value” for its money, the legislation from Sen. Chuck Grassley (R-Iowa) and Sen. Max Baucus (D-Mont.) proposes to link a small portion of physician Medicare payments to reporting of quality data and demonstrated progress against quality and efficiency measures.
The measures would focus on health care processes, structures, outcomes, patient experience of care, efficiency, and use of health information technology.
Participation in the program would be voluntary. However, those choosing not to report quality data would receive a reduced payment update.
Unlike the Johnson proposal, however, the Senate bill has no fix for the SGR, Mary Frank, M.D., president of the American Academy of Family Physicians, said in a statement.
Instead, the legislation “attempts to improve the payment system to physicians without attempting to stem the declining Medicare reimbursement rate.”
Physicians could face lower Medicare payments and additional costs under such requirements, Dr. Frank said. While it might increase doctors' costs in order to meet and report specific care standards, the bill “doesn't help them obtain the technology to do so,” she said. Without the technology to participate in the bill's proposed reporting system, physicians' reimbursement will be cut even further, hindering their ability to afford the technology. “Sound like a vicious cycle? It is,” she said.
The outcome is family physicians, for example, might be forced to close their doors to Medicare beneficiaries, Dr. Frank said.
In addition, “tons of implementation questions” aren't broached in this bill, Michele Johnson, senior governmental relations representative of the Medical Group Management Association, told this newspaper.
“Right now, there are no evidence-based, valid scientific measures of efficiency, unless you're talking about clinical measures,” Ms. Johnson said. It's unclear how such measures would be developed under the legislation, and how people would physically report these quality measures.