Congress Moves to Fix Doctors’ Medicare Pay

Reacting to concerns that the current Medicare payment formula has discouraged many doctors from accepting Medicare patients, Congress has made a move that may result in doctors receiving more money for their Medicare services.

The Current Medicare Payment Formula

In many ways, conflict between Medicare and doctors dates back to 1988, when Congress, hoping to rein in Medicare costs, introduced a price-control system called the Resource-Based Relative Value Scale (RBRVS). While the RBRVS paid doctors less per service, it was not a very effective measure, as many doctors compensated for their loss per service by performing more services.

medical doctorNine years later, Congress introduced a new Medicare payment formula as part of a balanced-budget law. The new formula, called Sustainable Growth Rate (SGR), aimed to tie physician fee increases to changes in the nation’s GDP.

Medicare payments have been tied to the SGR formula since 1997. Doctors and others have noted that the SGR formula was based on low GDP projections, and many doctors comment that the SGR formula significantly underpays them for the Medicare services they provide.

Politicians, long aware of doctors’ dissatisfaction with the payment formula and difficulties sometimes encountered by Medicare recipients as a result, have made periodic attempts to find payment solutions more satisfactory to doctors. But, while there have been more than a dozen short-term measures since 2002, there has not been a lasting solution to the Medicare funding conflict.

Many observers hope that recent moves by Congress will result in a lasting solution to the payment conflict between doctors and Medicare.

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H.R. 2810

Also known as the Medicare Patient Access and Quality Improvement Act of 2013, House of Representatives bill 2810 was passed 51-0 by the United States House Energy and Commerce Committee on July 31 of this year. While passage by the full committee is an important step toward enactment of the bill, H.R. 2810 still needs to be passed by both houses of Congress and signed by the President before it can become law.

According to the House Energy and Commerce Committee website, the primary goal of H.R. 2810 is to change the current Medicare payment formula: “First and foremost, the bill repeals the flawed sustainable growth rate (SGR) system and replaces it with a fair and stable system of payments. Instead of looming annual cuts, physicians will be rewarded for the quality of care they provide to Medicare beneficiaries.”

Performance is not factored into the current Medicare payment formula, but performance will have some effect on doctors’ pay if H.R. 2810 becomes law.

Under provisions of the bill, starting in 2019 doctors will be evaluated based on their adherence to established medical standards and procedures, and their ability to keep patients healthy while keeping costs to Medicare relatively low. Evaluation will involve comparing doctors to others in their fields of medicine.

While some medical professionals will welcome the opportunity to see their pay increased, incentives as spelled out in H.R. 2810 do not amount to a sizable increase. Doctors whose performance is judged as superior will stand to gain 1% in extra pay. Doctors judged to be low-performing, meanwhile, will be assessed a penalty of 1%. Doctors failing to provide information required to assess quality will face a 3% penalty.

As for the more immediate future, H.R. 2810 addresses a key complaint many doctors and observers have had with regard to SGR. In the words of Rep. Michael Burgess, M.D. (R-TX), sponsor of the bill, under the current system “inflation is causing doctors’ costs to far outpace what they are being paid by Medicare.” As a result, H.R. 2810 calls for reimbursements to doctors to increase by 0.5% during each year from 2014-2018.

While there is virtually no chance that a 0.5% annual increase will keep up with inflation, supporters of H.R. 2810 see the bill, and the proposed scrapping of SGR, as a step in the right direction. According to Burgess, H.R. 2810 represents “a solution that is good for both doctors and Medicare patients.”

Enactment of the bill is far from certain, however. reports that only about 23% of bills making it past committee from 2011-2013 were enacted. Yet the bipartisan support evident in the 51-0 Energy and Commerce Committee vote is a hopeful sign to supporters of the bill.

H.R. 2545

Another bill of note is the Accuracy in Medicare Physician Payment Act, also known as House of Representatives bill 2545. H.R.2545, introduced in the House on June 27 of this year, seeks to reconcile payment for Medicare services with the actual amount of time doctors spend providing those services.

The Health Care Blog, which supports passage of H.R. 2545, reports that, currently, “in some cases physicians are paid for more than 24 hours of procedures in a single day.” While some doctors presumably may object to limiting payment to reflect actual time spent rendering services, H.R. 2545, in tandem with H.R. 2810, at least seems to signal Washington’s determination to update the Medicare payment system in a manner that is sustainable.

Key to changing Medicare for the better, of course, is getting doctors on board by acknowledging their concerns, and the House’s movement away from the SRG formula may go a long way in that regard. Satisfied doctors, much like Medicare supplement insurance, will greatly reduce any stress Medicare recipients may otherwise face in dealing with the Medicare system.

Are you hopeful that proposed legislation will satisfy doctors and convince more to accept Medicare patients? Please leave a comment below.

Check out our previous post to learn why so many doctors are leaving Medicare.

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