Second Permanent Fix to Medicare Payment Proposed in U.S. House

The drumbeat to permanently repair the Medicare physician payment system continues to rumble across Capitol Hill, despite a cacophony of competing claims for Congressional attention.

In a coda to legislation already introduced, the Medicare Physician Payment Reform Act of 2005, H.R. 4520, (at the THOMAS Web site, type "HR 4520" in the search box after selecting "Bill Number"), calls for increasing Medicare payment to physicians and "lays out a plan for a permanent solution enabling physicians to count on fair annual payment adjustments," said the bill's author, Rep. Pete Stark, D-Calif.

The proposal gained quick praise from AAFP Board Chair Mary Frank, M.D., of Mill Valley, Calif. "Your bill provides a number of opportunities for Medicare physician payment reform," said Frank in a Dec. 13 letter to Stark. (PDF file: 1 page / 170 KB. More about PDFs.) "Your leadership in addressing the seriously flawed formula will help Medicare patients receive the health care that they need and deserve."

The Medicare Physician Payment Reform Act would provide payment increases of as much as 1.5 percent for both 2006 and 2007 while the Medicare Payment Advisory Commission develops recommendations for replacing the current system. That system uses a formula based on the sustainable growth rate, an expenditure target linked to the country's economic growth and the volume of physician services.

"Congress has made several attempts at fixing the system, but only on a short-term basis," said Stark in a Dec. 13 news release announcing the bill. "We need to move beyond dealing with the problem immediately facing us and fix Medicare's payment system once and for all."

Focusing on a permanent solution bodes well for ensuring that patients have access to comprehensive primary care, said Frank in her letter.

"We are also concerned that Medicare and the private plan payment policies seriously undermine the development of a primary care physician workforce, and we appreciate your including an examination of that issue as well," she wrote.

The Stark bill joins the Medicare Value-Based Purchasing for Physicians' Services Act of 2005, H.R. 3617 (at the THOMAS Web site, type "HR 3617" in the search box after selecting "Bill Number"), introduced July 29 by Rep. Nancy Johnson, R-Conn.

Like the Stark proposal, Johnson's legislation would replace the SGR formula with the Medicare economic index. In 2007, physician payment would be tied to meeting performance measures. A one-time, 1.5 percent payment increase in 2006 would help stabilize medical practices' incomes and increase the feasibility of investing in the technology, staff and training necessary to participate in pay-for-performance, also known as P4P.

The drive to change Medicare physician payment began in May when an earlier bill, the Preserving Patient Access to Physicians Act of 2005, was introduced in the Senate as S. 1081 (at the THOMAS site, type "S 1081" in the search box) by Sens. Jon Kyl, R-Ariz., and Debbie Stabenow, D-Mich. Its counterpart, H.R. 2356 (at the THOMAS site, type "HR 2356" in the search box), was introduced in the House by Reps. E. Clay Shaw Jr., R-Fla., and Benjamin Cardin, D-Md.

The proposal would override use of the SGR in the Medicare physician payment formula and increase physician payment by 2.7 percent in 2006. In subsequent years, the increase would reflect physicians' practice costs and inflation, expected to be about 2.6 percent.

One final note: Although introduction of the new Stark proposal is good news, the debate on how to fix the SGR will be postponed until at least next year, according to Kevin Burke, director of AAFP's Division of Government Relations. That's because the budget reconciliation bill passed by the House Dec. 19 and expected to be acted on in the Senate Dec. 20 or 21 freezes the Medicare payment rate for one year.