What Does the Future Hold for Medicare Physician Payment?

By Jaime Mulligan, Director of Congressional and Regulatory Affairs
The independent body that advises Congress on Medicare issues is grappling with the question of how to lower the mammoth program’s costs while increasing the quality of services to beneficiaries.
Physician reimbursement is consistently a hot topic among the 17 members of the Medicare Payment Advisory Commission (MedPAC), established by the Balanced Budget Act of 1999. In fact, Congress recently directed MedPAC to deliver a report on replacing the “sustainable growth rate” (SGR) system by March 2007. The SGR is a formula used to lower Medicare spending by reducing payments to physicians. At the end of last year, Congress reversed a planned 5 percent SGR cut for 2007 after receiving complaints from several physician groups, including the ACA.
The commission is aware that the SGR is not the solution to all Medicare woes. “I think that there is agreement within the Commission that improving the efficiency and quality of the services provided to Medicare beneficiaries is not as simple as coming up with a new SGR mechanism,” said Glenn M. Hackbarth, JD, MedPAC chairman.
While the preliminary report on the SGR presented at MedPAC’s Oct. 5 public meeting made it clear that there is no consensus on what alternatives might work, the commission’s non-endorsed draft vision for Medicare outlines some possible strategies:

  • Change payment incentives: link quality with Pay-for-Performance (P4P), encourage care coordination, explore bundling of services, ensure accurate prices, promote the use of primary care, explore the benefits of groups (i.e., multi-specialty practices), revisit Medicare’s benefit design
  • Collect and disseminate information: measure resource use, clinical and cost effectiveness
  • Pay greater attention to program integrity: use provider standards, capitalize on contractor reform
Discussion of the various points within the vision occupied a good deal of commission time at the meeting. The overwhelming opinion was that much work and thought was still needed. Here are some additional areas of emphasis outlined by the commission:
  • Care coordination via one primary care provider received a lot of attention, with the idea that chronic conditions can be more effectively treated with increased training, time, and possibly reimbursement for care coordination.
  • Volume of services was also an emphasis, with stress put on the current design of the reimbursement system, which rewards small units of payment—effectively an incentive for increased volume. More bundling of services may result in increased resource control.
  • The pricing of services was discussed, relaying current issues in the establishment of the Relative Work Values (RVUs) for services. MedPAC believes that some services are overvalued. It recommends that CMS establish its own group of experts to provide information that supplements what is provided by the AMA RVS Update Committee.
No matter what Congress eventually decides to do, it’s clear that physician accountability will be a highlight. ACA remains concerned that Medicare documentation problems among chiropractors cited by the HHS Office of the Inspector General (OIG) in a June 2005 report will continue to present significant challenges for DCs and their patients.
Several Democrats in Congress have raised the idea of opening the Medicare program to the general population as a way to solve the U.S. health care coverage crisis. If this should happen, proper documentation would be the foundation for the type of accountability envisioned for the future of physician reimbursement.
ACA recommends that DCs visit www.acatoday.org/medicare and explore the various resources available. For more information on MedPAC, visit www.medpac.gov .