Lawmakers push super committee to make major Medicare pay reforms

Some want panel members to incorporate a physician payment overhaul into their debate about long-term deficits.

By Charles Fiegl — Posted Oct. 10, 2011

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Some lawmakers have joined physician associations in calling on the Joint Select Committee on Deficit Reduction to enact major Medicare reforms as it attempts to lower future deficits by at least $1.2 trillion.

Sen. Patty Murray (D, Wash.), co-chair of the special congressional panel, has said everything, including changes to major entitlement programs, would be on the table as members move toward a Nov. 23 deadline to vote on compromise legislation. Some panel members have their eyes on Medicare and Social Security outlays because they factor so largely in deficits. Spending on Medicare alone is projected to rise to 5.5% of gross domestic product in 2035 from 3.6% of GDP in 2010, according to trustees for the program.

But some health industry and policy experts say long-term debt reduction in Medicare should begin with eliminating the sustainable growth rate formula that helps determine physician payment rates. Overhauling the SGR actually would raise spending projections and increase the amount of reductions the debt panel would need to find elsewhere. But failing to account for an SGR repeal only masks future deficit problems, the Obama administration and others have argued.


Rep. Allyson Schwartz (D, Pa.)

Rep. Allyson Schwartz (D, Pa.) has circulated a letter among her colleagues urging the committee to incorporate a repeal of the SGR into its plan. The formula, created in the Balanced Budget Act of 1997, has produced unrealistic spending targets and scheduled reductions in physician pay rates for the past 10 years. Congress has prevented those cuts by approving overrides to maintain payments or provide slight increases.

"It's important for us to provide some reassurance to physicians who accept Medicare that they will not face the SGR every year," Schwartz said. She had 22 signatures on her letter at this article's deadline, including six Republicans.

The American Medical Association and dozens of specialty organizations and state medical societies also have urged the committee to work on eliminating the SGR. The cost for overhauling the Medicare payment system has escalated through the years to more than $300 billion today from $48 billion in 2005. If Congress were to wait until 2016, eliminating the SGR is projected to cost $600 billion, according to the AMA.

"There is wide bipartisan agreement that the Medicare physician payment system is broken, and we know that continued reliance on recent policies will increase the cost of fixing the problem," said AMA President Peter W. Carmel, MD. "With a nearly 30% cut looming for physician payments, the fiscally responsible action for the congressional deficit committee is to repeal the Medicare physician payment formula now."

But time constraints mean that the special committee might not be able to make big changes to the Medicare program, said Marilyn Moon, PhD, a senior vice president and director at the American Institutes for Research in Washington. The program is complicated and needs attention to ensure that the right policies are in place to produce desired outcomes, such as maintaining physician access for beneficiaries, she said.

Most policy analysts agree that the SGR must be repealed, said Moon, a health economist who served as a public trustee for the Social Security and Medicare trust funds. Payment should be reformed in a way that gives health professionals reassurances that large rate cuts will not occur, she said.

Other proposed changes, such as restructuring patient cost-sharing in the Medicare program to reflect fees paid by beneficiaries in the private insurance market, should go before the committee, she said. This could be accompanied by other policies that she said make sense for the program. For instance, the committee could partially balance any increase in Medicare deductibles by establishing an out-of-pocket limit, which does not exist.

Sens. Joseph Lieberman (I, Conn.) and Tom Coburn, MD (R, Okla.), also have asked the committee to make major reforms to entitlement programs. In June, the senators proposed Medicare reform legislation that would save the program an estimated $500 billion over 10 years. The bill would require wealthier Americans to pay more for Medicare, increase the minimum premium to cover 35% of the total bill, cap out-of-pocket spending and raise the eligibility age to 67 from 65.

Rep. Michael Burgess, MD (R, Texas), has asked the committee to put the health system reform law on the negotiating table. Government mandates under the statute will cost nearly $1.5 trillion by expanding Medicaid rolls and subsidizing coverage for the uninsured, Dr. Burgess said in an opinion piece appearing in the Oct. 3 Washington Times. "We can't afford this new spending. So why not start there?"

Pushing for medical liability reform

The AMA and 98 state and specialty societies also are calling on the panel to include medical liability reforms in its compromise bill. An Oct. 3 letter to the committee urged members to enact a $250,000 cap on noneconomic damages, collateral source rule reform, and additional liability protections for physicians and other health professionals.

Comprehensive liability reforms would save federal health programs $62 billion over 10 years, according to Congressional Budget Office estimates.

"Preserving quality and access in medicine, while reducing unnecessary cost, will require fairness in the civil justice system," Dr. Carmel said. "Every dollar that government health programs spend on the broken medical liability system is money that cannot be used on health care."

Congressional Democrats and Obama have shown strong opposition to establishing liability damage caps.

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Protection for Medicare patients

The Joint Select Committee on Deficit Reduction is attempting to find targeted savings of at least $1.2 trillion to avoid an equal amount in automatic, across-the-board cuts to government programs. However, any automatic cuts to Medicare would be capped at 2%. The automatic reductions also must not affect:

  • Patient premiums for outpatient care and prescription drug coverage.
  • Patient deductibles for Medicare services.
  • Revenues to the trust fund for the inpatient portion of the program.

Source: "The Budget Control Act of 2011: Implications for Medicare," Kaiser Family Foundation, September (link)

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