WASHINGTON – Upon delivering its 2007 report to Congress, the Medicare Payment Advisory Commission (MedPAC) prompted reactions from healthcare industry stakeholders eager to weigh in on how Congress can best reform Medicare finance.
The independent advisory panel’s recommendations include an override of next year’s planned 10 percent cut to physician reimbursement for Medicare services. Instead, MedPAC says Congress should update payments based on practice cost increases. The panel also recommends a market basket increase to payments for inpatient and outpatient hospital services.
MedPAC Chairman Glenn Hackbarth testified before the Senate Finance Committee that the current physician payment method, based on the Sustainable Growth Rate (SGR), “is fundamentally flawed and doesn’t work the way it was intended.”
According to Hackbarth, the SGR system rewards overutilization and inefficiency, doesn’t reward physicians’ financial efficiency efforts, doesn’t penalize physicians who prescribe frivolous services and often rewards poor quality.
American Medical Association Board Chairman Cecil Wilson, MD, said the SGR is based on the ups and downs of the economy, not the healthcare needs of America’s seniors. “Medicare’s physician payment system is broken, and it’s time to fix the underlying cause,” he said. “Congressional intervention is critical.”
Members of the House Committee on Energy and Commerce’s Subcommittee on Health last month heard from several people who agreed with Chairman Frank Pallone, Jr.’s (D-N.J.), call for a permanent fix to the Medicare fee-for-service physician payment system before seniors’ healthcare access becomes threatened.
“We need a permanent solution to this problem,” Pallone said. “We should no longer settle for short-term fixes that simply kick the can down the road.”
Hackbarth said the problem should be viewed as a total Medicare cost problem, not just a physician cost problem. Any expenditure targets should be applied to all providers, he added.
The American Hospital Association, in its statement to the Subcommittee on Health of the House Committee on Ways and Means, supports MedPAC’s recommended market basket increases to hospitals’ inpatient and outpatient prospective payment systems.
The AHA rejected MedPAC’s recommendation that Congress make a 1 percent point reduction of the indirect medical education adjustment listed in President Bush’s FY08 budget. Such an adjustment equates to a 20 percent cut to payments for medical education, the AHA said.
Sen. Max Baucus (D-Mont.), chair of the Senate Finance Committee, applauded some of the initiatives recommended by MedPAC, such as paying for quality of care rather than volume and comparing the effectiveness of products and services to establish standards of care. But he also called for more substantial reform that will reimburse doctors “fairly and effectively.”
“The fact that MedPAC had a hard time determining the best way to move forward shows us just what a challenge reform will be,” said Baucus.