Lawmakers Want to Stop Fee-for-Service Medicare Payments

The chairmen of the U.S. House Ways and Means and the Senate Finance committees want to phase out the way Medicare pays doctors for their services.

They’re proposing a gradual change to a new system along with a pay freeze and incentives to give up fee-for-service billing.

“Enough with the quick fixes. Our proposal is for a new physician payment system that rewards value over volume,” Senator Max Baucus of Montana said in a statement. “It will go a long way in improving the efficiency and quality of care for America’s seniors.”

The proposal by Democrat Baucus and his Republican counterpart, Representative Dave Camp of Michigan, 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 be encouraged to use shared-savings programs and to bundle medical services through a single team, Bloomberg BNA reported.

Doctors would get a 5 percent bonus each year from 2016 through 2021 if “a significant share of their revenues” comes from these alternatives, according to a discussion draft distributed by the committees.

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.

Seeking Value

“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 briefing on the Baucus-Camp plan.

The chairmen have asked medical groups to provide their comments on the proposal by Nov. 12, according to the Bloomberg BNA report.

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.

No Freeze

Earlier this year, a different House committee put together its own proposal for breaking the “doc fix” cycle. Instead of freezing payments, that legislation, H.R. 2810, would allow annual increases of 0.5 percent over five years, according to the Bloomberg BNA report.

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.

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

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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