Congress mulls MD Medicare payment fixes

WASHINGTON, Nov. 17 (UPI) -- U.S. lawmakers said Thursday they want to fend off a planned 4.4-percent cut in Medicare reimbursements to physicians, set for Jan. 1.

But in the long term the legislators are mulling how to permanently overhaul the physician-reimbursement system, as exasperated doctors, facing relentless payment decreases and soaring business overhead, are turning away new Medicare patients or considering leaving the profession altogether.

The House Committee on Energy and Commerce held a hearing Thursday to get input from Mark McClellan, chief of the Centers for Medicare & Medicaid Services (CMS), and other health officials, on fixing the problem.

The current Medicare payment system "is driving doctors away from Medicare and causing the best and the brightest to avoid the field altogether," said committee member Rep. Ralph Hall, R-Texas.

A primary culprit, the lawmakers said, is Medicare's controversial sustainable growth rate (SGR), which committee members and medical groups alike are calling for the agency to scrap.

Envisioned as a way to reduce Medicare costs, the much-maligned payment scheme automatically reduces doctors' payments as the practitioners' expenditures go up. But critics say the system fails because it doesn't link Medicare reimbursement to what it actually costs for doctors to provide services.

Congressional members are working to reverse a series of SGR-driven reimbursement cuts that would amount to a 26-percent decrease in doctor payments in the next six years, even while physicians' practice-related expenses are expected to rise by about 20 percent in that same time period.

A House budget amendment sponsored by Rep. John Dingell, D-Mich., would have provided some relief, giving doctors a 2.6-percent increase in Medicare payments for 2006 and a 2.7-percent payment hike in 2007, but the measure was defeated.

There will be more physician payment cuts if SGR is allow to continue, said Committee Chairman Joe Barton, R-Texas. "Doctors are struggling to justify carrying Medicare patients in their practices."

But Barton stressed that short-term fixes will only exacerbate the problem and that permanent, systematic change is critical. "I will not support just pouring more taxpayer dollars into a system that's broken," he said.

Dingell called on his fellow committee members to back a bill that would revive the yearly doctor reimbursement increases. "Then you can say to doctors, 'We're with you,'" he said.

Noting that Medicare patients currently get only about half of recommended care, Glenn Hackbarth, chairman of the Medicare Payment Advisory Commission, told the committee that the current SGR formula should be replaced with a more targeted system of "year to year evaluation of payment adequacy."

"SGR treats every doctor and ... every area of the country as if they were the same. That's not fair," he said. Also, Medicare patients should be given the option of enrolling in private health plans, Hackbarth said.

At the hearing, the managed-care industry took its share of heat for getting what critics say is the lion's share of a fast-shrinking Medicare purse. "Physicians are due for a 4.4 percent payment cut in January, while HMOs are expected to get a 4.8 percent increase," Dingell noted. "I wonder if this is a coincidence?" he said.

The Michigan lawmaker also criticized the Bush administration for not doing more. "Why is it that the administration doesn't want to help? Start with HMOs who promised they'd reduce spending, but they've only increased payments to themselves and their shareholders," he said.

HMOs are being rewarded for taking more than their fair share of Medicare payments, while doctors' reimbursements keep shrinking. "This is a shameful situation," Dingell said. "I look to forward to a solution."

For his part, McClellan said his agency did not dispute statistics showing that HMOs are responsible for 2.9 percent of Medicare premium increases, compared to the 2.5 percent attributed to physician services. The CMS head also told the panel that the agency is studying how much rising physicians' costs are due to so-called defensive medicine -- in which physicians, fearing lawsuits, order tests that may not be needed.

McClellan conceded that these costs figure into the SGR. He also acknowledged the need for effective medical liability reform.

In an effort to remodel the hotly criticized physician reimbursement scheme, CMS is doing pilot testing of a so-called pay-for-performance system, whereby doctors would be rewarded with higher Medicare fees by improving health outcomes and saving money.

But several lawmakers were skeptical of the idea, suggesting it might lead to patient "cherry-picking" by doctors padding their practices with healthy people and avoiding the chronically ill to get better health outcomes.

Some committee members blasted the concept as vague wishful thinking. "Does quality care meaning doing A, B and C?" Rep. Charlie Norwood, R-Ga., asked Hackbarth.

"What if I do A, B and C, but I don't pick up the malignant tumor and I kill the patient? Have I done a quality job?" Norwood said.

Rep. Tom Allen, R-Maine, grilled McClellan on why HMOs have been left out of the new formula. "If pay for performance is such a good idea, why not apply it to HMOs?" he asked. But McClellan said CMS pays the insurers more for health plans that save money.

Lawmakers also wanted to know why prescription drugs can't be taken out of the SGR calculation, but the CMS chief said the agency currently has no statutory authority to do so and that, in any case, it would be of little help, adding about $100 billion to Medicare costs.

McClellan told the committee that the Bush administration will support legislation that addresses the problem of negative physician payment updates and wants to see such a proposal rolled into the budget reconciliation.

But Dingell pressed McClellan for not coming to the hearing with more specific plans to fix the reimbursement problem. "We don't' have any recommendations from Bush. When are they coming?" he said.

McClellan testified that Medicare's current physician payment -- in which doctor reimbursements are tied to number of medical services -- is "not sustainable" and fails to support high quality care for Medicare beneficiaries. He said the administration wants to work with Congress to develop a stable reimbursement system that supports doctors' best efforts to provide good care while reducing costs. The current system, in which doctor reimbursement goes down as their spending goes up, is a "vicious circle." That only leads to a decline in quality of care, he said.