House Hears SGR Alternatives, Vows Action

WASHINGTON – A plan to finally replace Medicare's much maligned Sustainable Growth Rate payment formula could be unveiled by this summer, federal lawmakers predicted at a committee hearing May 5.

"Here's the bottom line: If we get to December and we're doing an extension, that's a failure on our part," Rep. Michael Burgess (R-Tex.) said at the hearing of the House Energy and Commerce Committee's Subcommittee on Health. "We need a permanent solution that's predictable, updatable, and reasonable for this year – and nothing else will do."

Photo credit: American Medical Association

"Whatever virtues the SGR had when it was created 14 years ago, ... it's clear that they have vanished," noted Rep. Henry A. Waxman (D-Calif.). He added that in the past 2 years, Congress has had to pass legislation six times, blocking fee cuts of up to 21% or more.

Approximately 30 medical associations responded to the House subcommittee's request for suggestions and proposals in developing a new system. Speaking Thursday with a five-person panel of experts from medical associations and health policy organizations, House subcommittee members considered alternatives to the current SGR formula, which some participants labeled as anything but sustainable.

One Size Won't Fit All. While the details of the plans vary, they do show a consensus on several fronts: repealing the SGR, moving away from the traditional fee-for-services payment model, and providing a 4- to 5-year transition period in which providers can experiment with a variety of payment systems.

The expert panel also stressed the importance of avoiding a "one size fits all" solution.

"I think we should also have a realization that what will work in one part of the country will not work in another part of the country, and that's why we have continued to talk about a variety of options," said Dr. Cecil B. Wilson, president of the American Medical Association. "There is a temptation to feel like we ought to figure out one rule ... that solves it all."

Dr. Wilson pointed to the provisions in the Affordable Care Act that allow for a variety of models of accountable care organizations, embodying the concept of options in the medical system. In that spirit, Dr. Wilson said that the AMA has formed a physician leadership group to evaluate the effectiveness of alternative payment methods.

Dr. M. Todd Williamson, of the Coalition of State Medical and National Specialty Societies, introduced the option of private contracting, in which patients would be free to apply their benefits to a doctor of their choice, who would be free to opt out on a per-patient basis.

"Private contracting is a key principle of American freedom and liberty," Dr. Williamson said. "[It] will help the federal government achieve fiscal stability while fulfilling its promise to Medicare beneficiaries."

Harold D. Miller, executive director of the Center for Healthcare Quality and Payment Reform, suggested an episode-of-care payment plan through which hospitals and physicians jointly charge one price for all services included in a hospitalization. The model would also include a warranty stating that any infections or complications would be treated at no additional cost. Also, a physician practice would receive one payment for all patient needs associated with chronic diseases or other conditions.

Rep. Burgess, who is also a doctor, said organizations should focus on ways to address patients with chronic conditions, adding that 80% of Medicare funding is spent by 20% of beneficiaries with chronic illnesses.

Is IPAB the New SGR? Rep. Fred Upton (R-Mich.) raised concerns about the Independent Payment Advisory Board (IPAB), created by the Affordable Care Act. The board sets expenditure targets, on which it bases spending cuts. In 2018, targets will be based on the gross domestic product. "Sounds a lot like SGR, which we're trying to get rid of," Mr. Upton said. "Since hospitals are exempt from IPAB cuts through the rest of the decade, it seems that the IPAB has the potential to undermine any serious efforts at physician payment reform."

Some panelists agreed.

"It's not impossible that [the IPAB] could serve a function," Dr. Wilson said, "but as presently constituted, we see it [as] basically another target for physicians to meet – potential double jeopardy, with an SGR as well as the pronouncements from this body."

The panelists also asserted their belief that whatever plan chosen should be physician led, with financial support of the government.

"It would be very helpful if physicians could get better financial support in their own payment system to enable them to lead all of those efforts," said Dr. Mark B. McClellan, director of the Engelberg Center for Health Care Reform and former administrator of the Centers for Medicare and Medicaid Services. "Right now, with fee-for-service staying the way it is, they're staying behind." Dr. McClellan added that physicians can be the best sources for innovative and cost-saving mechanisms.

WASHINGTON – A plan to finally replace Medicare's much maligned Sustainable Growth Rate payment formula could be unveiled by this summer, federal lawmakers predicted at a committee hearing May 5.

"Here's the bottom line: If we get to December and we're doing an extension, that's a failure on our part," Rep. Michael Burgess (R-Tex.) said at the hearing of the House Energy and Commerce Committee's Subcommittee on Health. "We need a permanent solution that's predictable, updatable, and reasonable for this year – and nothing else will do."

Photo credit: American Medical Association

"Whatever virtues the SGR had when it was created 14 years ago, ... it's clear that they have vanished," noted Rep. Henry A. Waxman (D-Calif.). He added that in the past 2 years, Congress has had to pass legislation six times, blocking fee cuts of up to 21% or more.

Approximately 30 medical associations responded to the House subcommittee's request for suggestions and proposals in developing a new system. Speaking Thursday with a five-person panel of experts from medical associations and health policy organizations, House subcommittee members considered alternatives to the current SGR formula, which some participants labeled as anything but sustainable.

One Size Won't Fit All. While the details of the plans vary, they do show a consensus on several fronts: repealing the SGR, moving away from the traditional fee-for-services payment model, and providing a 4- to 5-year transition period in which providers can experiment with a variety of payment systems.

The expert panel also stressed the importance of avoiding a "one size fits all" solution.

"I think we should also have a realization that what will work in one part of the country will not work in another part of the country, and that's why we have continued to talk about a variety of options," said Dr. Cecil B. Wilson, president of the American Medical Association. "There is a temptation to feel like we ought to figure out one rule ... that solves it all."

Dr. Wilson pointed to the provisions in the Affordable Care Act that allow for a variety of models of accountable care organizations, embodying the concept of options in the medical system. In that spirit, Dr. Wilson said that the AMA has formed a physician leadership group to evaluate the effectiveness of alternative payment methods.

Dr. M. Todd Williamson, of the Coalition of State Medical and National Specialty Societies, introduced the option of private contracting, in which patients would be free to apply their benefits to a doctor of their choice, who would be free to opt out on a per-patient basis.

"Private contracting is a key principle of American freedom and liberty," Dr. Williamson said. "[It] will help the federal government achieve fiscal stability while fulfilling its promise to Medicare beneficiaries."

Harold D. Miller, executive director of the Center for Healthcare Quality and Payment Reform, suggested an episode-of-care payment plan through which hospitals and physicians jointly charge one price for all services included in a hospitalization. The model would also include a warranty stating that any infections or complications would be treated at no additional cost. Also, a physician practice would receive one payment for all patient needs associated with chronic diseases or other conditions.

Rep. Burgess, who is also a doctor, said organizations should focus on ways to address patients with chronic conditions, adding that 80% of Medicare funding is spent by 20% of beneficiaries with chronic illnesses.

Is IPAB the New SGR? Rep. Fred Upton (R-Mich.) raised concerns about the Independent Payment Advisory Board (IPAB), created by the Affordable Care Act. The board sets expenditure targets, on which it bases spending cuts. In 2018, targets will be based on the gross domestic product. "Sounds a lot like SGR, which we're trying to get rid of," Mr. Upton said. "Since hospitals are exempt from IPAB cuts through the rest of the decade, it seems that the IPAB has the potential to undermine any serious efforts at physician payment reform."

Some panelists agreed.

"It's not impossible that [the IPAB] could serve a function," Dr. Wilson said, "but as presently constituted, we see it [as] basically another target for physicians to meet – potential double jeopardy, with an SGR as well as the pronouncements from this body."

The panelists also asserted their belief that whatever plan chosen should be physician led, with financial support of the government.

"It would be very helpful if physicians could get better financial support in their own payment system to enable them to lead all of those efforts," said Dr. Mark B. McClellan, director of the Engelberg Center for Health Care Reform and former administrator of the Centers for Medicare and Medicaid Services. "Right now, with fee-for-service staying the way it is, they're staying behind." Dr. McClellan added that physicians can be the best sources for innovative and cost-saving mechanisms.

WASHINGTON – A plan to finally replace Medicare's much maligned Sustainable Growth Rate payment formula could be unveiled by this summer, federal lawmakers predicted at a committee hearing May 5.

"Here's the bottom line: If we get to December and we're doing an extension, that's a failure on our part," Rep. Michael Burgess (R-Tex.) said at the hearing of the House Energy and Commerce Committee's Subcommittee on Health. "We need a permanent solution that's predictable, updatable, and reasonable for this year – and nothing else will do."

Photo credit: American Medical Association

"Whatever virtues the SGR had when it was created 14 years ago, ... it's clear that they have vanished," noted Rep. Henry A. Waxman (D-Calif.). He added that in the past 2 years, Congress has had to pass legislation six times, blocking fee cuts of up to 21% or more.

Approximately 30 medical associations responded to the House subcommittee's request for suggestions and proposals in developing a new system. Speaking Thursday with a five-person panel of experts from medical associations and health policy organizations, House subcommittee members considered alternatives to the current SGR formula, which some participants labeled as anything but sustainable.

One Size Won't Fit All. While the details of the plans vary, they do show a consensus on several fronts: repealing the SGR, moving away from the traditional fee-for-services payment model, and providing a 4- to 5-year transition period in which providers can experiment with a variety of payment systems.

The expert panel also stressed the importance of avoiding a "one size fits all" solution.

"I think we should also have a realization that what will work in one part of the country will not work in another part of the country, and that's why we have continued to talk about a variety of options," said Dr. Cecil B. Wilson, president of the American Medical Association. "There is a temptation to feel like we ought to figure out one rule ... that solves it all."

Dr. Wilson pointed to the provisions in the Affordable Care Act that allow for a variety of models of accountable care organizations, embodying the concept of options in the medical system. In that spirit, Dr. Wilson said that the AMA has formed a physician leadership group to evaluate the effectiveness of alternative payment methods.

Dr. M. Todd Williamson, of the Coalition of State Medical and National Specialty Societies, introduced the option of private contracting, in which patients would be free to apply their benefits to a doctor of their choice, who would be free to opt out on a per-patient basis.

"Private contracting is a key principle of American freedom and liberty," Dr. Williamson said. "[It] will help the federal government achieve fiscal stability while fulfilling its promise to Medicare beneficiaries."

Harold D. Miller, executive director of the Center for Healthcare Quality and Payment Reform, suggested an episode-of-care payment plan through which hospitals and physicians jointly charge one price for all services included in a hospitalization. The model would also include a warranty stating that any infections or complications would be treated at no additional cost. Also, a physician practice would receive one payment for all patient needs associated with chronic diseases or other conditions.

Rep. Burgess, who is also a doctor, said organizations should focus on ways to address patients with chronic conditions, adding that 80% of Medicare funding is spent by 20% of beneficiaries with chronic illnesses.

Is IPAB the New SGR? Rep. Fred Upton (R-Mich.) raised concerns about the Independent Payment Advisory Board (IPAB), created by the Affordable Care Act. The board sets expenditure targets, on which it bases spending cuts. In 2018, targets will be based on the gross domestic product. "Sounds a lot like SGR, which we're trying to get rid of," Mr. Upton said. "Since hospitals are exempt from IPAB cuts through the rest of the decade, it seems that the IPAB has the potential to undermine any serious efforts at physician payment reform."

Some panelists agreed.

"It's not impossible that [the IPAB] could serve a function," Dr. Wilson said, "but as presently constituted, we see it [as] basically another target for physicians to meet – potential double jeopardy, with an SGR as well as the pronouncements from this body."

The panelists also asserted their belief that whatever plan chosen should be physician led, with financial support of the government.

"It would be very helpful if physicians could get better financial support in their own payment system to enable them to lead all of those efforts," said Dr. Mark B. McClellan, director of the Engelberg Center for Health Care Reform and former administrator of the Centers for Medicare and Medicaid Services. "Right now, with fee-for-service staying the way it is, they're staying behind." Dr. McClellan added that physicians can be the best sources for innovative and cost-saving mechanisms.