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Details of Medicare Doctor Plan Still to Be Worked Out

By Emily Ethridge, CQ Roll Call

February 14, 2013 -- House Energy and Commerce members began discussing different elements of a plan to replace how Medicare pays doctors, but some disagreements may be difficult to overcome.

Lawmakers from both parties praised the proposed schedule offered by Chairman Fred Upton, R-Mich., to bring a replacement measure to the House floor by the August recess.

Joe Pitts, chairman of the Health Subcommittee, said there is broad agreement to repeal the current payment formula, the sustainable growth rate (SGR), as well as on some details.

"In thinking about the proper payment policy, there seems to be fairly widespread agreement that certain elements are needed to build that system," said Pitts, R-Pa., at a recent subcommittee hearing.

For example, physicians and payers need to be able to access reliable health data, and there should be appropriate measures to help assess progress, he said.

Still, some division remains over what kinds of payment models should replace the current formula. Democrats largely supported expanding on models that already are being tested or used in Medicare, including accountable care organizations (ACOs) and patient-centered medical homes.

Several Republicans expressed skepticism with the accountable care model, in which doctors, hospitals, and other providers voluntarily coordinate care. Medicare reimburses the entire organization for its services, and participants get to share in any savings if they provide care for lower cost while still meeting quality benchmarks.

Glenn Hackbarth, chairman of the Medicare Payment Advisory Commission, said that ACOs are designed to be flexible, but Republicans wondered whether they would work for all types of providers. Bill Cassidy, R-La., noted that under a current Medicare shared-savings program, ACOs must care for at least 5,000 beneficiaries.

Virginia Republican Morgan Griffith questioned whether the ACO model would work in rural districts like his, where patients and providers are spread out.

"I wouldn't completely write off the possibility that the ACO model can be used in rural areas," Hackbarth said, noting that 20 percent of accountable care organizations currently involve community health centers, rural health clinics, and critical access hospitals.

He acknowledged, however, that whatever payment models come into play may not fit every physician, and that some providers may need to be treated as special cases.

Michael C. Burgess, R-Texas, also expressed concern that ACOs would lead to more consolidation of medical practices by hospitals.
Cassidy noted that he is working on a proposal that would allow physicians in small practices to participate in working relationships in which they share savings, but also maintain independence.

Lawmakers also hinted at disagreement on how to pay for the cost of replacing the payment formula. The Congressional Budget Office has lowered the cost of repealing the formula to $138 billion over 10 years—down from a $245 billion estimate last year.

"In effect, SGR repeal is now on sale. But the sale may not last forever," Hackbarth said.

The new, lower cost represents a good opportunity, lawmakers agreed, but they will still need to find a way to offset that cost.

Subcommittee ranking Democrat Frank Pallone Jr. suggested finding some savings from within the health care sector, but said the committee also should consider using savings from winding down the wars in Iraq and Afghanistan—something Republicans have opposed in the past. The New Jersey Democrat also suggested doing a budget baseline adjustment to assume the cost of repealing and replacing the formula.

"SGR repeal is too expensive to pay for with Medicare cuts alone—especially when Medicare cuts are being considered to reduce the nation's debt," Pallone said.

Lawmakers diverged on a replacement proposal circulated by Republicans on the Energy and Commerce and Ways and Means Committees.

Pallone said if there is a commitment to write a bipartisan legislative proposal, then the decision to put out an all-Republican framework "is somewhat perplexing." He asked that any future products include the input of Democrats on the committee.

"As we move closer to the goal, I am confident that we can indeed make it a bipartisan effort," Upton said.

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