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'Doc Fix' Draft Creates Framework But Still Needs an Offset

By Emily Ethridge, CQ Roll Call

July 19, 2013 -- Lawmakers introducing bipartisan, updated draft legislation to replace Medicare’s physician payment system are hopeful for its chances but wary of major challenges ahead, including finding an appropriate budgetary offset.

Rep. Michael C. Burgess, R-Texas, praised the collaboration between members of both parties and stakeholders, and said that lawmakers are prepared for the eventual fights over how to pay for the proposal.

“It’s so important to get the policy right, and get this through the committee process, and getting both sides to work together,” said Burgess, one of the sponsors of the draft bill, which was unveiled on Thursday night and is set for markup in subcommittee on Monday.

“There will be big budget fights that are coming...but at least whatever happens in that environment, there will be the framework upon which to build,” Burgess said.

The House Ways and Means Committee, which has direct jurisdiction over many potential offsets, could take up the bill and add an offset there. Members of that committee have been contributing to the draft proposal. In the past, Democrats have proposed using savings from winding down the wars in Iraq and Afghanistan to pay for the fix, but most Republicans have opposed the idea.

House Energy and Commerce Chairman Fred Upton, R-Mich., has pledged the bill will be fully paid for. Burgess said he expected members would “each go to our respective corners on both sides” during the offset fight, but that he hoped an agreement could be found.

Energy and Commerce ranking Democrat Henry A. Waxman of California emphasized the importance of acting soon to repeal the sustainable growth rate (SGR), the formula that dictates payments to Medicare providers.

“I want to see the SGR problem resolved,” Waxman said. “It’s been a problem for a very long time.”

The House Energy and Commerce Health Subcommittee will begin a markup of the draft legislation Monday and continue it Tuesday. The proposal would repeal the SGR and replace it with an enhanced fee-for-service system, while also allowing providers to participate in alternative payment models emphasizing quality and efficient care.

Likely the biggest challenge for the draft legislation will be paying for it. The Congressional Budget Office estimates that repealing the SGR would cost $139.1 billion over 10 years.

Five Years of Stability
The draft proposal would first institute a five-year transition period, with annual payment updates of 0.5 percent, to give providers time to test quality measures and improvement activities. Burgess said that period would be the longest period of payment stability providers have seen in a long time.

The second phase would implement an enhanced Physician Quality Reporting System, which gives incentive payments to encourage doctors to report quality information. Under the legislation, that reporting will help set quality measures to assess performance, and providers who meet or exceed their specialties’ requirements will get payment increases.

“To me, one of the critical things was keeping modified fee-for-service, keeping a fee-for-service option in there” for physicians who are used to that system and do not want to move to new models, Burgess said. He added the draft includes “expanded, yet streamlined” mechanisms to make it easier for physicians to report information.

Under the draft, providers could opt out of the fee-for-service system at any time and participate in alternative payment models, such as patient-centered medical homes or bundled care.

American Medical Association President Ardis Hoven said in a statement that the draft “represents continued progress, though work remains to be done.”

“The new models must be accessible to physicians in all practice sizes and settings so the country’s physicians can have a stable practice environment that allows them to invest in their practices in order to provide high value care for Medicare patients,” said Hoven.

More for Primary Care?
Waxman said he hoped the bill would work for both specialists and primary care providers, but wanted to see more emphasis on primary care physicians.

“I think that they have been underpaid and are going to be in such demand, especially with the coordination of care and prevention care that we’re going to try to make available,” he said.

American Academy of Family Physicians President Jeffrey Cain agreed with Waxman’s stance, saying he was “disappointed” the draft did not specify a higher base payment rate for services provided by primary care physicians.

“Nonetheless, with this draft legislation, the Energy and Commerce Health Subcommittee has made solid progress in meaningful reforms that provide health security for elderly and disabled patients and restrain costs,” Cain said in a statement.

The Heritage Foundation has criticized legislation that would fundamentally change the SGR while making only small changes to the rest of Medicare.

“To do so would remove an impetus for the major structural reforms that Medicare needs in order to ensure its solvency for future generations,” the group said in a statement. It asked lawmakers to pair an SGR replacement with provisions to change Medicare into a premium support program.

Burgess said he would have worked for turning Medicare into a premium support program “if the election had turned out differently.” But, he noted, “there’s nothing in this preventing a premium support system from coexisting.” 

Emily Ethridge can be reached at [email protected].  

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