enews march 7

CQ TODAY – HEALTH
March 2, 2007 – 6:07 p.m.

No Long-Term Plan Likely This Year for Medicare Payments, Lawmakers Say

Drew Armstrong, CQ Staff - Lawmakers are planning another short-term fix for Medicare’s physician payment formula in the absence of concrete suggestions from an advisory panel and the high cost of major changes.

Rep. Frank Pallone Jr., D-N.J., chairman of the Energy and Commerce Health Subcommittee, said inconclusive recommendations from the Medicare Payment Advisory Commission (MedPAC) makes overhauling the formula this year all but impossible.

“They basically don’t come to a conclusion,” Pallone said. “That’s one of the reasons why I think it’s difficult to say what we’re going to do in response to it.”

The other is money.

“This is basically an impossible problem to solve without spending a lot of money,” MedPAC member and Urban Institute President Robert Reischauer said. “It’s terribly difficult to design a system that would be effective and not lead, at least in the short run, to a substantial increase in cost.”

The advisory body was expected by some to produce a blueprint for overhauling Medicare’s physician payment system. Although several Democratic aides had cautioned that they weren’t expecting a “silver bullet,” there was hope that the commission would provide a way forward on the troublesome formula, which has mandated cuts to physician pay each year since 2002.

Almost every year, lawmakers have stepped in to stop the cuts. Last year, Republicans coupled the effort with a small bonus for doctors who report cost and quality data. This year, Democrats are expected to do so again to halt an estimated 10 percent cut scheduled for January 2008. MedPAC’s members could not agree on a single long-term solution. Instead, they handed lawmakers two “paths.”

The first would discard the formula entirely and have Congress develop a new system to pay doctors based on the quality and value of the care they give. Doctors would be encouraged to work together to achieve better outcomes for patients and might be paid more for preventive care that stops costly health problems before they start.

Their pay is now based on the number of procedures and tests they perform.

A second path would use a modified version of the current formula but make it more sensitive to regional variations. A formula with spending targets based on small regions of the country or even individual groups of physicians and hospitals would reward those who keep costs down and try to control costs for higher spenders.

Focus on Stopping Physician Payment Cut.

Two key senators shared Pallone’s pessimism about making big changes in 2007.

Senate Finance Chairman Max Baucus, D-Mont., said the day before the MedPAC recommendations were unveiled that this was not the year for an overhaul. The day after, the panel’s ranking Republican, Charles E. Grassley of Iowa, said the same.

Both, though, committed to stopping the physician payment cut scheduled for 2008 and said they would like to couple that with a small bonus payment for reporting data on quality of care.

The bonus payment, Grassley and Baucus agree, is the way to solve the problem in the long term, too.

MedPAC Chairman Glenn Hackbarth acknowledged the challenges facing the system when he testified before the Finance Committee on March 1.

“None of these changes are going to be easy,” he said. “The alternative is the path that we’re on.”

Source: CQ Today