Legislation that provides a modest increase in Medicare payment to physicians next year still fails to resolve the ongoing threat to medical practice solvency, according to an AAFP letter recently sent to Sen. Charles Grassley, R-Iowa, chair of the Senate Finance Committee.
The Oct. 24 letter, signed by AAFP Board Chair Mary Frank, M.D., of Mill Valley, Calif., commends the committee for including in its finance proposal a 1 percent increase in Medicare payment to doctors. If adopted, the increase, part of the committee's consideration of House Continuing Resolution 95, (PDF file: 71 pages / 221 KB. More about PDFs.) would avert a scheduled 4.4 percent reduction in physician payments in 2006.
However, said Frank, the proposed legislation also puts many physicians in a no-win situation because it requires physicians to begin implementing pay-for-performance measures that are not affordable under the current payment scheme.
Under the proposed legislation, HHS would develop and implement "value-based purchasing programs" -- the name lawmakers have given to P4P initiatives -- for physicians, hospitals, Medicare Advantage plans, home health agencies and other health care entities. If the bill passes, HHS would tie future Medicare payment increases to whether physicians report their compliance with quality measures.
"The reporting requirements that the committee draft would impose on physicians are significant and costly, while the payment increase is, at best, modest," Frank said in the letter. "Physicians cannot meet the increasing performance reporting requirements when the payment for their services does not provide the financing to do so."
AAFP has called for a P4P system that rewards physicians who meet quality measures with new funds and has worked closely with legislators (PDF file: 2 pages / 220 KB. More about PDFs.) to craft a program that encourages physician participation.
The Senate Finance Committee proposal would eventually reduce payment to physicians who did not comply with reporting requirements. Under the bill, noncompliant physicians would see reductions in Medicare payments, beginning with 1 percent in 2009 and rising incrementally each year to 2 percent in 2013.
"The committee's proposal creates a system in which physician practices are penalized up to 2 percent of their payment if they do not report performance measures that they cannot afford to undertake," said Frank in the letter. "Such a system does not lead to improved quality but rather to physicians who increasingly cannot make ends meet."
In anticipation of congressional action on Medicare payment and P4P requirements, AAFP in Sept. 29 launched an Action Alert asking Academy members to contact their federal lawmakers. In the alert, members were asked to urge representatives and senators to repeal the sustainable growth rate formula currently used to establish Medicare physician payment rates and replace it with an equitable, predictable system.
Throughout the year, the Academy has worked with federal legislators to fashion a bill that would reward physicians for implementing P4P provisions. Earlier bills tied P4P programs to electronic health records that support compliance with reporting quality measures. Some proposals provided financial incentives to physicians who implement EHRs.
Since the introduction of these bills, however, federal outlays for responding to hurricanes Katrina and Rita have constrained other domestic spending. The result is that federal lawmakers are seeking reductions in Medicare and Medicaid to offset the cost of hurricane response and rebuilding. The Senate Finance Committee proposal, for example, would cut Medicare spending by $5.76 billion over five years.
