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House panel posts Medicare doc pay fix draft

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The leaders of the House Energy and Commerce Committee have come out with a proposal for overhauling the Medicare physician payment system.

The committee has posted a discussion draft of a “sustainable growth rate” (SGR) reform proposal on its section of the House website.

Members of Congress first included the SGR concept in the Balanced Budget Act of 1997 (BBA). The idea was to tie annual growth in per-enrollee Medicare spending to the annual growth rate in U.S. gross domestic product (GDP).

In practice, the SGR cuts would apply only to physicians and some other types of health care professionals, not to hospitals.

The SGR provisions has a big, indirect effect on the commercial health insurance market, because commercial health insurers often pay  providers fees tied to the Medicare rates.

In some cases, for example, a plan may pay out-of-network providers 125 percent of the Medicare rate for some services, or it may arrange to pay in-network providers 110 percent of the Medicare for all services.

Health care spending has grown much faster than GDP since 1997. Physicians and other affected providers have fought many successful battles to persuade Congress to put off applying SGR adjustments.

If Congress were going to cut Medicare physician reimbursement rates sharply enough to get back on the course required by the BBA SGR provision, the Medicare physician reimbursement rate would have to fall by about 27 percent.

Rep. Fred Upton, R-Mich., the chairman of the committee, and other committee members, such as Rep. Joe Pitts, R-Pa., the chair of the committee’s health subcommittee, have proposed replacing with SGR system with an effort to develop a quality-based “fee schedule provider competency update incentive program” that would type provider pay to quality scores.

The secretary of the U.S. Department of Health and Human Services (HHS) would develop the update incentive program together with relevant stakeholders.

Providers could avoid having to deal with the incentive program by agreeing to participate in an “alternative payment model,” such as an accountable care organization (ACO) program, a medical home program, a bundled payment program, or some other program that might help hold down total payments.

The discussion draft does not say whether or how Congress would offset any extra spending done while HHS was trying to get the new, quality-based spending programs to generate the kind of savings that the SGR program was supposed to generate.

Upton seemed to express an interest in bipartisanship in the proposal announcement.

“We will continue working closely with Ways and Means Committee Chairman [Dave] Camp as well as maintain our ongoing dialogue with committee Democrats as we work toward long-term solutions in the effort to improve quality of care,” Upton said in a statement.

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