Medical Device Daily Washington Editor
WASHINGTON — The healthcare debate writ large - that writing ongoing since healthcare inflation took root in the 1960s - seems like a dance that will never end. And the same holds true for certain smaller portions of the larger debate, such as the sustainable growth rate (SGR) mechanism.
Yesterday, a hearing of the House Committee on Small Business made clear that the debate over the SGR is not so much a debate as it is a struggle to figure out how to permanently scrap that mechanism — one generally seen as responsible for blunting the dramatic growth in fees paid to doctors under Medicare Part B, but without inviting another sharp uptick in physician billings.
The only real disagreement at the hearing was whether doctors are as serious about bailing out of Medicare as they often assert.
After that, most of the attention was focused on the need to provide yet another temporary patch to forestall the SGR cuts, which would amount to more than 10% of the total fees paid to physicians.
Chairwoman Nydia Velazquez (D-New York) opened the session by describing the coming Medicare fiscal crunch as "one of the greatest obstacles facing small practices." She also hinted at Congress's interest in the Part B fee problem by saying that "one of the top priorities in the coming months is addressing the cuts in fees," taking effect July 1 — unless Congress (again) intervenes.
"Unfortunately, the administration has taken the position that the cuts must take place, even if they impact [patient] access to providers," Velazquez said. Noting that the cuts "are little more than a month away," she said that the Senate has a plan to delay them for 18 months.
She said a longer-term solution is called for, and that a plan is needed "that reflects the cost increases inherent in the practice of medicine."
Velazquez said that a survey of physicians conducted by the American Medical Association (AMA; Washington) indicates that 60% of physicians believed that the SGR cuts would impact their participation in Medicare and possibly impede beneficiary access to physicians.
Steve Chabot (R-Ohio), the ranking minority member, said that "small medical practices are critical to this nation's health ... and economic well-being." And he cited surveys which indicate that "physicians and patients continue to prefer small medical practice settings," apparently because they promote greater trust and confidence.
Chabot said that SGR has been overridden consistently since 2003, but he acknowledged that doctors often prescribe more costly services than are called for. He laid part of the blame on the fact that "Medicare pays more for poor care results" than it does for appropriate care.
However, he said that access to care "remains good."
The principal witness at the hearing, Herb Kuhn, deputy administrator of the Centers for Medicare & Medicaid Services, said the administration's view is that "it is critical that we move from passive payer to active purchaser of high-quality, efficient care."
He also suggested that reports of physicians fleeing from Medicare are overblown, saying, "nearly 95% of eligible physicians and other practitioners are Medicare-participating providers, up from approximately 90% in 2004."
"Nobody disputes that there are problems with the current formula," but patches simply put the problem off for the future, Kuhn said. And he said that CMS has been working with AMA for the past several years on reviews for relative value updates for payments to primary care physicians, "and in 2007, we substantially raised the rates for primary care services" based on the outcome of a five-year review of utilization data.
According to Kuhn's written testimony, the Medicare Payment Advisory Commission is nonetheless still concerned that "the distribution of Medicare physician payments may still undervalue primary care services," despite the pay boost for primary care.
Kuhn pointed out that the the Dartmouth Atlas of Healthcare, 2008 edition, indicates that resource utilization still varies conspicuously from physician to physician.
He said that among the administrations initiatives to rewire incentives are the Physician Quality Reporting Initiative and the Physician Group Practice demonstration. However, Kuhn said that these initiatives are "in their infancy and still need further refinement and analysis" before they will offer clear guidance on how to revamp reimbursement.
Velazquez said that CMS has not revamped the method of calculating the Medicare Economic Index (MEI), a tool employed to determine what is the inflation rate for the practice of medicine by tracking changes in various costs of doing business, such as employee wages.
Kuhn responded to that by saying that CMS "believes that it continues to be a good indicator for growth at this time," and that "the real work is with the RBRVS system," the resource-based relative value system, which determines how much work doctors put into services.
He said that the five-year review in 2006 involved "a substantial number of changes" to reimbursement based on RBRVS calculations.
Velazquez yielded no ground, however, saying "I just can't buy that the Medicare economic index has not changed for the past 35 years."
Kuhn replied: "We saw double-digit increases in physician payment" on a number of occasions since the inception of Medicare, and he made the case that "the real issue is how we change" the way Medicare pays physicians.
"Even if we see a low growth rate," the system has to be revamped because the overall trend toward inflation that is not linked to improved quality always resurfaces, he said.
Chabot asked Kuhn, "How inconvenient and how detrimental is it to doctors and patients when, year after year, the [SGR] fix comes very late for planning purposes?"
Kuhn acknowledged that "it probably is very disruptive for physicians" that the low degree of predictability in reimbursement can blunt investment in IT, as one example. Physicians also may be wary of taking on more Medicare patients as a result of last-minute patches.
"For any business person in this country, they need predictability and stability," Kuhn said.
Chabot's conclusion: "I think Congress needs to get its act together so people can plan in advance."