Briefing on Capitol Hill

The National Commission on Physician Payment Reform released a report March 4th on Capitol Hill detailing sweeping recommendations aimed at reining in health spending and improving quality of care by eliminating the fee-for-service model by the end of the decade.

The Society of General Internal Medicine recognizing that the way physicians are paid drives the high level of spending convened the Commission last March. This independent Commission was funded in part by the Robert Wood Johnson Foundation and the California Healthcare Foundation. Physicians from a variety of specialties, public and private sector leaders, consumer advocates, and health policy experts took part in the discussions.

The Commission was chaired by former Robert Wood Johnson Foundation President Steven A. Schroeder, M.D., and former Senator Majority leader Bill Frist, M.D. As Senator Frist emphasized, “Payment reform is not a partisan issue—it is an American issue so we have to pull together.  We can’t control runaway medical spending without changing how doctors are paid. Since we all want to get the most from our healthcare dollars, we need to rethink the way that we are going to pay for healthcare.”

Dr. Schroeder, currently Professor of Health and Health Care at the University of California, San Francisco said, “The way we pay doctors is profoundly flawed. We need to move rapidly away from fee-for- service and embrace new ways of paying doctors to encourage cost-effective, high quality care.”

The Commission recommends that the Sustainable Growth Rate (SGR) be eliminated. The SGR was originally included in the 1997 Balanced Budget Act to enable Congress to control the growth of physician reimbursement under Medicare. It basically pegs payment for physicians’ services to the growth of GDP.  If the cumulative rate of spending for physicians’ services under Medicare exceeds the target SGR in a given year, then payments for physician services the following year are to be reduced and vice-versa.

Every year when payments for physicians’ services have exceeded the SGR, Congress has had to step in to prevent cuts in payments for physicians. This has been called the “doc-fix” and has taken place 15 times over the past decade.

The Commission wants the repeal of the SGR to be paid with cost savings from the Medicare program as a whole, including both cuts to physician payments and reductions in inappropriate utilization of Medicare services.

In another SGR action on Capitol Hill, legislation was recently introduced related to the elimination of the SGR. Representative Allyson Schwartz (D-PA) and Joe Heck, (R-NV) introduced the “Medicare Physician Payment Innovation Act”. The bipartisan legislation would permanently repeal the SGR formula and work towards reforming the Medicare payment and delivery system.

After a year of deliberation, the Commission adopted 12 recommendations for reforming physician payment. Initial steps include fast tracking new models of care such as accountable care organizations and patient-centered medical homes.

Specifically, some of the other recommendations call for adopting bundled payments for patients with multiple chronic conditions, call for fee-for-service contracts to incorporate quality metrics into the negotiated reimbursement rates,  seeks to eliminate higher payments for facility-based services that can be performed in lower cost settings, encourages small practices with fewer than five providers to form virtual relationships and share resources, and fixed payments should only focus on areas where potential exists for cost savings and higher quality.

A discussion took place at the briefing with the following panelists:

  • JudyAnn Bigby, MD. former Secretary of the Executive Office of Health and Human Services for the Commonwealth of Massachusetts
  • Troyen A. Brennan, M.D., Executive Vice President and Chief Medical Officer at CVS Caremark
  • Kavita Patel, M.D., Economic Studies Fellow and Managing Director for Clinical Transformation and Delivery, at the Engelberg Center for Health Care Reform at the Brookings Institution
  • Steven E Weinberger, M.D., Executive Vice President and CEO for the American College of Physicians

The panelists agreed that basically, the report maps out a timeline and roadmap for the future so that doctors will have some idea of what to expect, explains that one size does not fit all especially for doctors in small practices, emphasizes the team approach to care, pays more attention to quality and outcomes, and puts more emphasis prevention and wellness.

To download the full report, go to

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