Plan Would Fix Medicare Payments But Offsets Fall Short

Share this page

This week the House of Representatives is poised to vote on a legislative package that would permanently change how physicians are paid in Medicare.

The legislation would eliminate the need for annual “doc fixes” — a more than decade-long ritual in which Congress steps in right before large cuts in payments are due to hit doctors because of the Sustainable Growth Rate (SGR) formula. That formula was originally put in place to control Medicare spending but is badly flawed.

With an April 1 deadline looming to thwart a 21 percent cut, there is momentum behind a bipartisan package that would replace the SGR with small annual increases in physician payments coupled with incentives to encourage value-related and outcomes-based payments. This would be an improvement over Medicare’s traditional fee-for-service structure.

While this approach has been agreed upon for a couple of years, the sticking point has been how to pay for the roughly $210 billion 10-year cost. House Speaker John Boehner and Minority Leader Nancy Pelosi, however, recently reached an agreement to offset only a third of the cost and to attach two-year funding for the Children’s Health Insurance Program (CHIP).

The offsets for the cost include increased Medicare premiums for wealthier beneficiaries and a small restriction on the ability of a Medigap insurance plan to cover deductibles.

These offsets, combined with the reforms to the SGR, have the potential to lower health care costs over the long term. Ideally, however, the entire SGR package would be offset. Concord Coalition Executive Director Robert L. Bixby, along with other budget and health care experts, recently signed a letter to legislative leaders urging Congress to fully offset SGR repeal.

External links:
Letter to Congressional Leaders
Medicare and CHIP Reauthorization Act
What’s In the House Proposal? (Kaiser Health News)

Share this page

Related Blogs