Senate Follows House on Changes in Medicare Payments

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The Senate Tuesday night overwhelmingly passed bipartisan legislation to permanently fix the formula for determining how physicians are paid under Medicare.

The final vote of 92-8 sent the legislation, already passed in the House, to President Obama, who is expected to sign it.

The votes came two weeks after an April 1 deadline under which physician payments were scheduled to be cut by 21 percent due to an often derided and often overridden formula called the Sustainable Growth Rate (SGR).

The bill will replace that formula with small annual increases coupled with incentives to encourage value-related and outcomes-based payments. It would also increase projected deficits by $141 billion over 10 years, according to the Congressional Budget Office.

The Senate voted down an amendment 42-58 that would have forced the legislation to comply with Pay As You Go (PAYGO) rules that were enacted to prevent Congress from worsening the budget outlook.

Supporters hope the new payment incentives will encourage system-wide reforms and thus ultimately lower national health care spending. The Medicare actuaries recently suggested that the new formulas will, over the long term, reduce physician payments below SGR levels. They express concern, though that such low payments could reduce beneficiaries’ access to physicians.

To avoid that, elected officials must continue pushing reform of the health care system. Lawmakers have left numerous ideas on the table that could further increase productivity and improve efficiency.

External links:
Estimated Financial Impact of Legislation (CMS)

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