Chairmen Ready to Propose New Medicare Doctor Fee Plan

The chairmen of the U.S. House Ways and Means and Senate Finance committees want to phase in over a decade a new system for paying doctors who treat Medicare patients, lawmakers in both parties said.

Republican Representative Dave Camp of Michigan and Democratic Senator Max Baucus of Montana are proposing to give physicians an incentive to get their Medicare reimbursements under alternative payment models.

The proposal would freeze physician payment rates for 10 years and give doctors bonuses for agreeing to accept certain percentages of Medicare revenue through the alternative payment methods. Doctors would get a 5 percent bonus each year from 2016 through 2021 if “a significant share of their revenues” come from these alternatives, according to a committee discussion draft distributed by Washington Council Ernst & Young.

After 2023, doctors who opt for alternative payment systems would get a 2 percent increase in reimbursement each year, according to the draft. Doctors who opt to continue to be paid according to Medicare’s fee-for-service system would get a 1 percent annual increase in reimbursement.

“It’s looking for better value, less emphasis on volume, more emphasis on quality, which is good,” Senator Jay Rockefeller, a West Virginia Democrat, said after a Senate Finance Committee briefing on the Baucus-Camp plan.

Senator John Thune, a South Dakota Republican, said the two chairmen are “using this as an opportunity to get some quality incentives” into Medicare.

Coming after partisan disagreements so great that the U.S. government was partially shut down earlier this month, the cross-party cooperation by the two chairmen increases the prospects of the plan’s success.

Their goal is to replace the Sustainable Growth Rate (SGR), a formula enacted as part of the Balanced Budget Act of 1997 to curb the growth in health-care costs.

That formula has led Congress to vote each year since 2003 -- and sometimes more than annually -- on a “doc fix” that has prevented decreases in Medicare’s physician reimbursements, which would discourage doctors from participation. Medicare is the government’s health-care program for people 65 and older and for people under 65 with certain disabilities.

As described by lawmakers, the Baucus-Camp payment alternatives would be available alongside the standard fee-for-service model in 2017, after a three-year transition period.

Camp and Baucus aren’t including in their proposal any additional mechanism to offset additional government costs, lawmakers said.

CBO Estimate

The Congressional Budget Office estimated in February that it would cost $138 billion in the next 10 years to keep reimbursement rates at the current level. Lower health-care costs have reduced the agency’s 10-year estimate, which was $245 billion last year -- one reason that permanently fixing the formula has become more popular.

Under the SGR, Medicare’s reimbursements for medical care are scheduled to be reduced by more than 24 percent on Jan. 1, 2014, according to the Department of Health and Human Services.

There were 215,919 primary-care physicians in the U.S. treating Medicare fee-for-service patients in 2012, according to the Centers for Medicare and Medicaid Services, which is part of HHS. The average primary-care physician got about 25 percent of his or her revenue from Medicare patients in 2012, according to the American Academy of Family Physicians.

To contact the reporter on this story: James Rowley in Washington at jarowley@bloomberg.net

To contact the editor responsible for this story: Katherine Rizzo at krizzo5@bloomberg.net

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