Burgess Opposes Short-Term Doc Pay Patch Without Progress Toward Permanent Fix

Rep. Michael C. Burgess (R-Texas), principal sponsor of a House bill (H.R. 2810) to fix the problematic Medicare physician pay system, said Nov. 19 he will oppose a short-term fix if Congress fails to enact legislation to change the system by the end of the year. Noting the dwindling number of days left in the current congressional session, Burgess said he would support a short-term “doc fix” only if “things are moving in the right direction” in both the House and Senate by December. If Congress fails to approve a new pay system or extend current rates with a “doc fix,” Medicare physician reimbursement rates will drop by about 24 percent beginning Jan. 1. The House bill to replace the sustainable growth rate (SGR) formula for Medicare physician reimbursements received a unanimous vote in the Energy and Commerce Committee in July. In October, the Senate Finance Committee and House Ways and Means Committee issued a discussion draft of another plan to change the system. Burgess, speaking at a program on SGR change at the Brookings Institution, said he had been told the Senate Finance Committee would mark up a legislative version of the discussion draft during the second week of December. A Senate Finance Committee aide declined to confirm whether a specific date had been set. During a question-and-answer session, Burgess acknowledged that having Congress “careening toward the end of the year again” without a new Medicare payment plan in place “is an uncomfortable place to be.” But he added that “if a short-term patch is necessary to get us to action on a solution to this problem, as long as we’re moving in the right direction, I won’t say ‘no.’” The House is scheduled to be in session 10 more days before the end of the year, while a final Senate schedule through December hasn’t been announced. Fee-for-Service Targeted Both the Energy and Commerce measure and the Senate Finance-House Ways and Means proposal attempt to better align Medicare physician payments with medical outcomes, moving away over a period of years from the current fee-for-service system, which critics say rewards volume over quality. One difference between the two proposals is that while a new payment system is being phased in, the Energy and Commerce measure would allow physicians a series of small yearly payment increases, and the Senate Finance-House Ways and Means proposal wouldn’t. Instead, under the Senate Finance-House Ways and Means proposal, physicians would be eligible for incentive payments if they shifted a portion of their practices into alternative care models, such as bundled payments and accountable care organizations. Concern About Cost of Plans Burgess acknowledged that the cost of both plans to change the SGR was a major consideration as they were being developed. In September, the Congressional Budget Office (CBO) estimated the Energy and Commerce SGR bill would cost $175 billion over 10 years, through 2023. The CBO hasn’t estimated the cost of the Senate Finance-House Ways and Means proposal because it isn’t yet in legislative form. However, the plan is expected to cost less than the Energy and Commerce measure because it would freeze physician rates for 10 years, rather than allow increases of 0.5 percent over five years, as the Energy and Commerce measure would provide. Burgess said the Energy and Commerce bill focused on the policy rather than on how the payment changes would be paid for. “When we are ready to actually move this, sure, I’ve got pay-fors in the back of my mind,” he said. “But you don’t throw your friends under the bus until the end of the parade,” he added, noting that was a lesson he learned from former House Ways and Means Chairman Bill Thomas (R-Calif.). Challenges Cited Following Burgess’s remarks, a panel of five congressional aides who worked on the SGR proposals acknowledged the difficulty in coming up with cuts or new revenue to help pay for the new payment plans. “The challenge is the offsets,” said Amy Hall, with the Democratic staff on the Energy and Commerce Committee. “There may be a lot of unhappy customers on the outside.” Added James Paluskiewicz, Burgess’s deputy chief of staff and senior health care adviser, “There’s always pain associated with offsets, absolutely, but the pain now comes at the end of every year [with annual doc fixes] and if it’s going to be happening anyway, why not do the reform today instead of delivering pain year after year?” Labs a Potential Target As lawmakers look for ways to pay for an SGR fix, lab groups are lobbying hard to keep clinical laboratories from bearing any more of the brunt of increased physician payment. They note that since 2010, laboratory payments have been reduced by more than 11 percent. Reductions implemented in recent years include a 1.75 percent reduction every year for five years (2010-2015), a permanent annual productivity adjustment, a 2 percent cut to pay for the 2012 SGR “fix,” and a 2 percent reduction in fiscal 2013 as a result of sequestration. In an action alert sent to members, the American Association for Clinical Chemistry notes that as members of Congress discuss ways to cut federal spending to fix problems with the sustainable growth rate and reform entitlement programs, “everything, including laboratory services, is on the table.” President Obama has proposed extending the 1.75 percent cut, due to expire in 2015, for another eight years. Speaking at G2 Intelligence’s Lab Institute last month, Alan Mertz, president of the American Clinical Laboratory Association, said that while lab copay and competitive bidding could be brought up again, he is most worried about continued cuts to the clinical laboratory fee schedule. Extending the 1.75 percent cut to 2023 would reduce Medicare test reimbursement by an additional $9.46 billion over 10 years. Takeaway: As lawmakers look for a way to “fix” the sustainable growth rate used to set Medicare payment for physicians, labs remain a potential target for cost savings.