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Barton Eyes 45-Day March to New Physician Payment System

By John Reichard, CQ HealthBeat Editor

September 28, 2006 -- Saying he wants to "start with a clean sheet of paper," House Energy and Commerce Committee Chairman Joe Barton (R-Tex.) said Thursday that he wants to work over the next month and a half to come up with a deal that will overhaul the Medicare physician payment system.

The fact that efforts are coming to naught to pass legislation on the issue by the end of the week did not keep Barton from speaking boldly about what he aims to accomplish by the end of the year.

The big hurdle in the overhaul of a Medicare doctor payment formula that has lined up doctors for cuts totaling 40 percent over nine years is repealing the sustainable growth rate (SGR) formula, but Barton told a House hearing that he's ready to make a run at it.

The Congressional Budget Office has estimated the 10-year cost of repealing it at over $200 billion, but Barton was undeterred. "I am more than willing to support totally scrapping the SGR system and holding doctors harmless for that deficit," he said. "It's kind of funny money, anyway. It's an accounting mechanism. I think we can wipe it off the books and start from scratch."

Barton outlined other elements of his thinking on revising payments that sounded far more feasible. "I'm prepared to put on the table a multi-year approach that holds physicians harmless, at a minimum, and provides some incentives for some additional payments based on what physicians themselves voluntarily do to advance quality and efficient care," he said, adding "we'll go from there."

Barton addressed a hearing by the Energy and Commerce Health Subcommittee called to refocus efforts in preparation for the lame-duck session of Congress that starts Nov. 13.

Rep. Charlie Norwood (R-Ga.) appeared ready to fly into the breach with Barton. "He's committed to getting this done by Christmas, and it's all right with me if it's Christmas Eve," Norwood said.

Subcommittee Chairman Nathan Deal (R-Ga.) said he's game for the fight. "For us, we have to find offsets," he said, referring to cuts that likely would have to be made elsewhere in Medicare to pay for erasing a Jan. 1 scheduled cut of 5.1 percent and cuts of a similar size for many years thereafter. Finding offsets is "hard," he said, "but as I told Chairman Barton, so what if it's hard?" Norwood knows where he aims to go to erase physician payment cuts—"HMOs have to cough up some," he said.

Ranking Energy and Commerce Member John Dingell (D-Mich.) had the same target in mind. "Of course some will say that paying physicians will cost too much," he said. "But why can't we simply shift the billions in overpayments to HMOs to pay an adequate wage to doctors? There is absolutely no reason that HMOs should receive more generous payments than a senior's doctor."

The hearing saw considerable support for the idea of a committee-produced bill that would modify a three-year payment fix floated by Barton by shortening it to two years. The American Medical Association (AMA) expressed support for the idea, saying doing so would allow a higher payment increase than the modest increases floated by Barton in recent days.

The draft Barton proposal would increase Medicare payments to physicians by 0.5 percent in 2007, 2008, and 2009.

The proposal would pay physicians an additional 0.25 percent in 2008 and again in 2009 if they participated in a local utilization management program and either took part in a Medicare program for reporting on the quality of their care; participated in a pilot project to have a single primary care doctor coordinate care of the chronically ill; or reported on the use of at least three "structural" measures, such as electronic systems to follow up on referrals and abnormal test results, registries to track patient compliance with recommended treatments, and programs to reduce medical errors.

Norwood said he thought there would be bipartisan support on the committee for a deal blending the Barton proposal and a bill introduced by Dingell (HR 5916) that would provide for two years of stable payments for doctors while Congress thoroughly explored the creation of a pay-for-performance system.

Norwood said maybe the three years should be shortened to two years and doctors should be given increases on 1 percent in each of the two years instead of 0.5 percent annually over three years.

Subcommittee members and the various physician groups seemed to be in sync on the broad outlines of how to proceed—a multi-year agreement to keep doctors from being cut, development of a voluntary system of reporting data on quality of care during that period, and a study by the Centers for Medicare and Medicaid Services of what should be done to replace the SGR.

Doctors also expressed frustration over the hits they are taking under the payment system while, in their view, other sectors avoid cuts.

"Only physicians and other health professionals face steep cuts under this flawed payment formula," said AMA Board Chairman Cecil Wilson in written testimony. "Other providers have been receiving updates that fully keep pace with their costs (and will continue to do so under current law), including Medicare Advantage plans which are already paid 11 percent in excess of fee-for-service costs," he added. "Physicians and other health care professionals (whose payment rates are tied to the physician fee schedule) must have payment equity with these other providers. Physicians are the foundation for our nation's health care system, and thus a stable payment environment for their services is critical."

Deal expressed some reservations about a pay-for-performance system in which the government decided what constituted better performance. Another approach is to measure doctors on quality and give that information to consumers to decide which physicians to go to for treatment, he suggested.

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