House Hearing Considers Ways To Reverse Medicare Physician Payment Cut
House Ways and Means Health Subcommittee members at a hearing on Thursday "vowed" not to allow Medicare payments to physicians to be reduced by 4.3% in January, but it is uncertain how they will accomplish the reversal, CongressDaily reports (Rovner, CongressDaily, 7/22). Under the current funding formula, known as the sustainable growth rate formula, Medicare payments to physicians are scheduled to be reduced by about 5% annually over the next seven years. Some lawmakers have proposed addressing the problem by altering the existing formula to include a pay-for-performance component, in which doctors would receive financial incentives for improving quality.
At the hearing on Thursday, CMS Administrator Mark McClellan said the current physician-payment system is not sustainable and expressed support for a so-called P4P system, CQ HealthBeat reports. However, health subcommittee Chair Nancy Johnson (R-Conn.) said that combining a P4P system with the SGR funding formula would not "protect doctors against major payment cuts." Johnson has proposed repealing the SGR formula and instead increasing Medicare physician payments each year based on changes in the Medicare Economic Index, which tracks changes in the costs of physician care (CQ HealthBeat, 7/21).
Johnson and House Ways and Means Committee Chair Bill Thomas (R-Calif.) said McClellan should act administratively to remove the cost of physician-administered drugs from the formula used to calculate physician payments, which they said would help address the payment issue. McClellan said it is not clear that he has the authority to make such a change (CongressDaily, 7/22). However, he "did not rule out the possibility" that Medicare attorneys might ultimately remove drugs from all calculations, CQ HealthBeat reports.
Responding to Johnson's call for an MEI-based formula, McClellan noted that the 10-year cost of switching from the SGR formula to an MEI-based formula would be $183 billion over 10 years, up from a previous estimate of $163 billion (CQ HealthBeat, 7/21).
Physicians on Thursday "remained adamant that the cuts be reversed," CongressDaily reports. John Armstrong, a spokesperson for the American Medical Association, testified that "physicians cannot absorb these draconian payment cuts, and unless Congress acts, physicians may be forced to avoid, discontinue or limit the provision of services to Medicare patients" (CongressDaily, 7/22).
Underscoring its efforts in Congress, AMA on Thursday "launched a barnstorming tour across Iowa" -- home state of Senate Finance Committee Chair Chuck Grassley (R), who has endorsed efforts to reverse the cuts -- to protest the planned payment reductions, the AP/Omaha World-Herald reports. AMA trustee William Hazel said, "Physicians want to serve senior patients, but they cannot accept an unlimited number of new Medicare patients into their practice if Medicare payments do not keep up with the cost of providing care."
According to the AP/World-Herald, AMA cited an internal survey showing that 38% of AMA members said they would stop taking new Medicare patients if the first of the six scheduled cuts goes into effect in January (AP/Omaha World-Herald, 7/22). Meanwhile, Jerome Kassirer, former editor in chief of the New England Journal of Medicine, testified on Thursday that physicians' ties to the pharmaceutical industry "have a negative influence on the quality and cost of patient care and the trust of the public, and that the profession's response to these threats has been inadequate." Kassirer added that industry payments to physicians contribute "to the increased and increasing costs of medical care" by increasing the use of the newest, most costly medicines (CongressDaily, 7/22).