House Ways and Means Health Subcommittee Chair Nancy Johnson (R-Conn.) on Thursday (7/28/05) introduced a bill that would repeal the existing formula for calculating Medicare's physician payments and replace it with a system linking payments to quality, CongressDaily reports. The measure, which seeks to pre-empt a scheduled 4.3% cut in Medicare physician payments in January, could become part of this fall's budget reconciliation package, according to Johnson (CongressDaily, 7/28).
At a press briefing to announce the introduction of her bill, Johnson said it is "extremely important" that Congress not continue to "kick the can down the road" by enacting a temporary payment fix to avoid the scheduled cut, as it has done in years past. The $30 billion to $40 billion cost of such fixes should go toward a permanent change in the Medicare doctor payment system, Johnson said.
Her proposal would eliminate the existing sustainable growth rate formula and replace it with a system under which annual payment increases would be based on the growth of the Medical Economic Index. MEI tracks the cost of providing physician care.
The bill calls for a 1.5% payment increase in 2006. MEI-based payment increases, which would start in 2007, would be reduced by one percent that year and in 2008 if doctors fail to report data on the quality of care they provide.?
According to CQ HealthBeat, the legislation does not include "gain-sharing" provisions, which allow doctors and hospitals to share savings if they develop ways to improve the efficiency of treatments (CQ HealthBeat [1], 7/28).
Costs, Outlook
The Congressional Budget Office has estimated that repealing the current SGR formula would cost as much as $183 billion over the next 10 years (CongressDaily, 7/28). CBO also has estimated that an MEI-based system would cost as much as $155 billion over 10 years.
Johnson and House Ways and Means Committee Chair Bill Thomas (R-Calif.) have called on CMS to administratively remove prescription drug spending from the physician payment formula, which would reduce the 10-year cost of an MEI-based system by $114 billion. CMS officials have said they might not have the legal authority to make such a change.?
According to CQ HealthBeat, it is "unclear" how much support Johnson has for her bill. Thomas has yet to announce his support, but Johnson says he is "supportive" of her efforts (CQ HealthBeat [1], 7/28).
C. Anderson Hedberg, president of the American College of Surgeons, at the conference said that the group would not support a quality-improvement effort unless the threat of payment cuts is eliminated.
Meanwhile, CongressDaily reports that the inclusion of Johnson's proposal in the fall's budget reconciliation package "might open other parts of the Medicare program, which the [Bush] administration and GOP leaders want to avoid during the delicate implementation period for Medicare's drug benefit" (CongressDaily, 7/28).
