MedPAC Approves Plan To Overhaul Formula for Medicare Pay Rates
On Thursday, the Medicare Payment Advisory Commission voted 15-2 to approve its $220 billion plan to replace the sustainable growth rate formula, which sets Medicare physician payment rates, The Hill's "Healthwatch" reports (Baker, "Healthwatch," The Hill, 10/6).
Since 2002, Congress annually has passed a series of short-term bills to block scheduled cuts to Medicare reimbursement rates under the SGR. The most recent "doc-fix" bill, enacted in December 2010, is scheduled to expire on Jan. 1, 2012, at which point physicians face a 29.4% payment rate cut.
Details of Recommendations
The MedPAC recommendations include:
- Updating hospital payments by 1% for 2012, while recovering previous overpayments, saving $14 billion;
- Altering home health care payments in 2013 without an update in 2012, saving $10 billion;
- Changing reimbursements for some categories of durable medical equipment, saving $8 billion;
- Repealing bonus payments for quality improvements in Medicare Advantage, saving $6 billion;
- Implementing copayments for home health episodes, saving $4 billion; and
- Raising to 75% the compliance threshold for inpatient rehabilitation facilities, saving $3 billion (California Healthline, 9/21).
The approved recommendations replace the current SGR formula with a 10-year fee schedule that would freeze primary care payment rates and cut rates for other providers by 5.9% for three years before also being capped.
The panel also approved three other recommendations that would:
- Direct HHS to collect data on Medicare fees and efficient care delivery within three years;
- Increase saving opportunities for health care providers by encouraging participation in accountable care organizations; and
- Require HHS to identify overpriced services and reduce their reimbursement rates immediately (Adams, CQ HealthBeat, 10/6).
According to National Journal, the recommendations are non-binding and Congress often ignores the committee's proposals (McCarthy, National Journal, 10/6).
During MedPAC's discussion, many commissioners expressed concern about the proposal's offsets, according to CQ HealthBeat. Karen Borman, director of the surgical residency program at Abington Memorial Hospital in Pennsylvania, and Ronald Castellanos, a urologist at Southwest Florida Urologic Associates, were the two commissioners who voted against the recommendations.
Castellanos said that a nurse practitioner would be eligible for a higher Medicare payment rate than a specialist under the plan. He said that idea was "extremely disturbing," considering how much training specialists undergo (CQ HealthBeat, 10/6).
He added that he believes the pay cut, along with the potential penalties for not using electronic health records or quality tracking systems, will force many physicians nearing retirement to leave their jobs (National Journal, 10/6).
Reaction From Physicians Groups
Immediately following the vote, lobbyists, physician advocates and medical professionals criticized the recommendations, CQ HealthBeat reports. Most groups support changing the current SGR formula, but they said that the changes should not be at the expense of health care providers (CQ HealthBeat, 10/6).
The American College of Cardiology released a statement saying that the "proposal is not an acceptable or sustainable solution to the SGR and does nothing to promote quality or resource stewardship" (National Journal, 10/6).
The National Coalition on Health Care in a statement praised MedPAC for attempting to find an alternative to the SGR formula. The group said, "Whether or not MedPAC's shared sacrifice approach is the right one, at least MedPAC has gotten serious about addressing provider payment," adding, "It is long past time that our elected leaders do the same" ("Healthwatch," The Hill, 10/6).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.