Key Senate, House Committee Chairmen Offer Plan to Fix Medicare Doctor Payments

The Democratic and Republican leaders of two key congressional committees have agreed on a framework to scrap the problematic Medicare payment formula for physicians and replace it with one that would link physician reimbursement to the quality of care provided, a step that could put an end to the annual "doc fix" debate.

The discussion draft released Thursday by the Senate Finance and House Ways and Means committees would do away with the Sustainable Growth Rate, or SGR. That formula, adopted as part of the deficit reduction law in 1997, will reduce Medicare physician payments by nearly 25 percent next Jan. 1 unless Congress intervenes.  Stopping scheduled payment cuts caused by the SGR has become a yearly ritual on Capitol Hill, leading to doctors’ frustration with the system and a growing budget problem because each deferral increases the size and price tag of the next fix.

"For years, Medicare payments to doctors have been at risk of getting slashed, limiting seniors' access to high quality care," said Senate Finance Committee Chairman Max Baucus, D-Mont. "Enough with the quick fixes. Our proposal is for a new physician payment system that rewards value over volume."

Providing a permanent solution – rather than the yearly "patches" that have become so familiar – "is vital to ensuring that seniors continue to have access to high quality care," said House Ways and Means Chairman Dave Camp, R-Mich.

Sen. Orrin Hatch of Utah, the top Republican on the Finance Committee, and Rep. Sander Levin of Michigan, the top Democrat on Ways and Means, have also endorsed the plan.

The proposal would make a historic shift in doctor payments, moving physicians from the traditional system in which they are paid for volume and instead use financial incentives to encourage them to move to alternative payment models emphasizing quality care. The framework would repeal the SGR and hold doctors’ pay at current levels as alternative payment models are developed and tested. It would combine some existing Medicare physician quality programs into a new initiative starting in 2017 that would offer doctors additional pay based on their performance on value-based criteria, such as making more same-day appointments for urgent needs and enhancing their use of electronic medical records.

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