Senate panel suggests delay in long-term reform of Medicare pay

Washington -- Senate Finance Committee leaders on April 28 offered a list of ideas for the first third of a national health reform bill, but a private discussion between senators and their staffs the next day did not produce significant agreements on the proposed solutions.

Nevertheless, the 48-page draft, which addressed improving patient care and reducing costs, provided more detail on the direction Senate Finance Committee Chair Max Baucus (D, Mont.) and highest-ranking Republican Charles Grassley (Iowa) would like to take health system reform. The draft was released after the first of three Finance public roundtable discussions. More policy option papers and private discussions were to follow the two remaining roundtable meetings, scheduled for May 5 and May 12.

The initial draft suggests updating the Medicare physician fee schedule by 1% in both 2010 and 2011 and offering no update in 2012. The system then would revert to existing law but might have a new maximum percentage for cuts under the sustainable growth rate formula.

Baucus said the committee is looking at offsetting the future cuts in the proposal by allowing physicians to keep savings derived from implementing medical homes, payment bundling and accountable care organizations. Such organizations would consist of groups of physicians and possibly hospitals responsible for both quality of care for and spending on their patients. "We're going to have demonstrations and try and figure out early on what works and what doesn't work," Baucus said. Preventing all Medicare physician fee cuts under the SGR formula would cost about $285 billion over a decade, he said.

The discussion paper also included a number of other Medicare payment reform proposals and additional suggested changes, such as:

• Working with national imaging services standards organizations to develop criteria that by 2013 would identify and reduce pay for physicians who order inappropriate imaging far more than their colleagues.
• Providing bonuses to physicians who provide at least 60% of their services in specified ambulatory care settings and to general surgeons who practice in yet-to-be-defined general surgeon scarcity areas.
• Extending the Medicare Physician Quality Reporting Initiative beyond 2010 and also paying bonuses to physicians who meet additional personal and practice certification standards every two years. The provision would penalize physicians by 2% of their Medicare pay starting in 2013 if they don't participate in PQRI.
• Linking hospital payments starting in 2013 to performance under Medicare's hospital pay-for-reporting program.
• Redistributing 80% of unused graduate medical education slots, with the exception of certain rural teaching hospitals. The proposal also would expand the number of overall residents for qualifying hospitals, with 75% of the new slots to be used for primary care or general surgery training.

A senior Republican Senate Finance Committee staff member said the draft paper was just the beginning of talks among panel members. "These aren't the only options on the table. Other members have other ideas."

The American Medical Association is carefully reviewing the proposal for the first third of the reform bill, said AMA Board of Trustees Chair Joseph M. Heyman, MD.

"Sens. Baucus and Grassley have made another important contribution to the health reform dialogue with their framework on potential changes in delivery and payment policies," he said. "Appropriately structured delivery reforms and changes in payment policy are essential elements of health reform."

Baucus and Grassley said the April 29 private Finance meeting produced significant agreement on the health system problems that need to be addressed in legislation. "Although there might be some disagreement about how to handle it," Grassley said. The senators also said maintaining a bipartisan process will be critical to success.

Grassley compared the draft paper to a corn kernel's first sprout.Three-fourths of a kernel's growth in the first month after planting occurs underground. "Well, we've had that three-fourths of growth," he said. "The serious stuff starts this very day."

The Senate Finance policy options paper can be accessed online link.