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'Doc Fix' Uncertainty Freezes Other Health Efforts, Panel Is Told

By Melanie Zanona, CQ Roll Call

December 9, 2014 -- Failure to replace Medicare's oft-criticized physician payment formula has shifted federal attention away from other necessary health reforms, witnesses told a House hearing on Tuesday, further stoking the debate over advancing permanent "doc fix" legislation in Congress.

"The sustainable growth rate was designed to control Medicare physician reimbursements, but has instead continued to stifle other federal entitlement reforms because it must constantly be addressed," said Christopher W. Holt, director of health care policy for the American Action Forum.

Witnesses at a House Energy and Commerce Health Subcommittee hearing urged lawmakers to find a permanent solution for avoiding the scheduled cuts facing Medicare physicians on March 31. Some of their recommendations for offsetting the cost include identifying overpriced services, instituting payment updates that are higher for primary care than specialty care and establishing a primary care bonus that is funded by non-primary care services.

Finding a way to pay for a doc fix marred efforts to pass legislation this year, with Republican Michael C. Burgess of Texas acknowledging that "it seems unlikely that the Senate will act" on the issue in the lame-duck, even though "the failure to replace the SGR has cost money."

Witnesses at Tuesday's hearing warned lawmakers that despite a recent slowdown in federal health spending growth, Congress will soon have to grapple with the aging baby boomer population and rising federal debt levels, suggesting a variety of entitlement reforms.

"Health care spending and its growth over time puts pressure on employer, government, and family budgets," said Mark Miller, executive director of the Medicare Payment Advisory Commission. "For the Medicare program, this pressure is particularly acute given the outlook for the federal debt and the projected increases in Medicare enrollment."

MedPAC, which is a nonpartisan commission that advises Congress on issues affecting Medicare, suggested short-term ways for reducing federal health costs and improving the program could include updating the fee-for-service payment rates, creating site-neutral payments, bundling payments, and incentivizing reductions in readmission rates in an effort to encourage cheaper and better quality of care.

However, some lawmakers took issue with the penalties imposed on hospitals when a patient is readmitted. They were concerned the penalties could unfairly punish facilities when a patient is readmitted for reasons unrelated to their first visit, but Miller emphasized that the penalties are not assessed on a case-by-case basis and instead examine a hospital’s overall rates of readmission.

"We don't want the penalty, we want them to avoid readmission, which is a much better event for everyone," Miller said.

Long-term improvements suggested by MedPAC include offering regulatory relief for providers who take on risk and streamlining quality measurements.

Lawmakers also raised concerns about how they can carefully balance entitlement reforms without harming beneficiaries. Democrats largely lauded Medicaid expansion in states, while Republicans criticized cuts to the popular Medicare Advantage program.

"There are no easy choices in health reform, and few if any changes that produce all winners and no losers," said Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget. "However, it is certainly possible to identify reforms that create more or bigger winners than losers by improving the way we deliver and consume health care and reforms that allocate resources to where they are needed most."

Some of the reforms suggested by Goldwein include encouraging the use of generic drugs, expanding bundled payments, reducing payment updates for post-acute care providers and scaling back certain exchange subsidies under the 2010 health care law (PL 111-148, PL 111-152).

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