How will you be paid?

By Scott Hultstrand, SCMA General Counsel

On Wednesday, the US House Energy and Commerce Committee in Washington will be holding a hearing on a physician Medicare reimbursement bill that was dropped two weeks ago by Republican leaders of the committee.  The title of the hearing is quite revealing about the future of physician reimbursement:  Reforming SGR: Prioritizing Quality in a Modernized Physician Payment System.  

In essence, two things are on the chopping block in Washington right now in regard to paying physicians:  SGR and Fee-for-Service.   

Most (if not all) physicians I talk to want to see SGR repealed.  There is near unanimity in the physician community about this, and that’s no surprise since each year physicians are faced with a 30% cut in their reimbursement based on the SGR methodology.  Thoughts from physicians on the end of fee-for-service as we know it are far more wide-ranging.  Let’s hit SGR first. 

SGR

For the first time in years, there is real momentum in Washington for the repeal of SGR.  Why?  Mainly two reasons.  One is a recent budget report indicating that repealing SGR was going to be much cheaper than anyone thought, with the latest cost of repeal coming in at $138 billion over 10 years, which is a lot but much less than the previously estimated $244 billion.  The second reason that SGR has a chance is because this is one of the few truly bipartisan issues in Washington right now.  Both Republicans and Democrats from the House and Senate seem to agree right now that SGR needs to go.  That’s not too hard to believe seeing that the entire health lobby has been vehemently against the SGR for quite a while now.   

Fee-for-Service

What’s more amazing is that there also seems to be a bipartisan agreement that fee-for-service as we know it needs to go, too.  Republicans and Democrats alike agree that fee-for-service needs to be buried along with SGR.  Here’s two representative examples of statements from Washington elected officials, and try to guess which one is from a Republican and which is from the Democrat:   

1. “We also must change the underlying fee-for-service system that Medicare uses to pay physicians. Fee-for-service promotes volume over value.” 

                                                                -or-  

2. “The current fee-for-service payment system treats all services the same.  It fails to take into account the quality of the care provided or how efficiently that care was furnished.  This needs to change too.” 

Hard to guess, huh?  They seem to be saying the same thing.  The first is from Sen. MaxBaucus, a Montana Democrat, and chair of the Senate Finance committee.  The second is from Rep. KevinBrady, a Texas Republican, and chair of the House Ways and Means Committee.  There is a surprising unity in Washington right now about doing away with fee-for-service as we know it.

The previously mentioned bill that was dropped by some other Republicans in the House Energy and Commerce Committee will be up for a hearing on Wednesday (live video from the hearing should be up on this website at 10am on Wednesday by clicking here), and it basically does three things:

1. It repeals SGR and provides a short period of stable payment updates.
2. It replaces the current fee-for-service system with a new fee-for-service reimbursement that pays for quality and not just quantity.
3. It allows physicians to avoid the new fee-for-service system by opting into ACO’s, bundled payments, or patient-centered medical homes.

Admittedly, the bill skimps on the details right now and is more of a springboard for discussion (see this link for the full bill). Nevertheless, the direction is clear, and this change is not just going to be for your Medicare payments.  Fee-for-service transformation is being discussed, and will likely be implemented even more quickly, at the commercial payer level, too. 

The Voice on Policy Issues. Stay tuned, because there will be much discussion on the issue of physician payment on The Voice over the next few weeks (and probably months and years!).  I hope that this blog will be a resource for you to not only know what is going on, but to start thinking through the changes you need to make to not just adjust but also to maximize the opportunities that are available to physicians right now because of the uncertainty.  If anyone knows how to fix this mess, it’s the physician community.  But that means we’ve got to roll up our sleeves, be willing to take some risks, and be the agents of change rather than waiting to see what happens.