Docs, Hospitals Rip MedPAC on Physician Pay Proposal - CQ HealthBeat

Docs, Hospitals Rip MedPAC on Physician Pay Proposal

By Jane Norman, CQ HealthBeat Associate Editor

A proposal by the Medicare Payment Advisory Commission to revamp the Medicare physician reimbursement system is drawing intense opposition from providers who say commissioners are demanding too much in health industry cuts to pay for the overhaul.


Sternly worded letters from the American Hospital Association (AHA) and the American Medical Association (AMA), along with physician specialty groups, will be in MedPAC’s mailbox when the commission meets Thursday. The first item on the agenda is a resumed discussion of a Medicare doctor reimbursement formula that lawmakers, experts and providers agree is deeply flawed and repeatedly in crisis.


The $300 billion estimated cost of a fix over 10 years is a huge barrier to changing the formula at a time when a joint congressional committee is digging into entitlement programs in a search for ways to trim the deficit. MedPAC in September offered up a 10-year solution. But it’s clearly sticking in providers’ throats


MedPAC has no real power to get its recommendations implemented. And historically, MedPAC is a low-key panel that debates enormously complex health policy issues in relative obscurity. But the commissioners are finding themselves in the middle of a firestorm in recent months. Congress asked for MedPAC’s advice specifically on a fix for the physician pay formula, known as the Sustainable Growth Rate, and MedPAC’s ideas are frequently mentioned in various deficit cutting proposals. Thus those who are affected are reacting quickly and loudly.


In its Oct. 3 letter to MedPAC Chairman Glenn Hackbarth, the hospital group strongly objected to the notion that health care providers’ reimbursements should be cut to offset the costs of an overhaul of the physician payment system. The MedPAC proposal would freeze payments for primary care doctors and also cut specialist reimbursements for three years and then freeze them.


A grab bag of other ideas was put forth by MedPAC as well, with impacts on hospitals, home health patients and agencies, durable medical equipment, drugmakers and skilled nursing facilities
AHA President and CEO Richard J. Umbdenstock said the commission should instead look to beneficiaries for offsets, including increasing the Medicare eligibility age and eliminating first-dollar coverage in Medigap. In addition, the current medical liability system should be revamped to provide additional savings, AHA says.


But Sen. Bernard Sanders of Vermont on Wednesday wrote a letter to Umbdenstock blasting hospitals as “disgraceful” for advocating an increase in the Medicare eligibility age from 65 to 67.
“We must keep our promise to provide Medicare at age 65 to American workers who have contributed payroll taxes to Medicare throughout their working lives,” Sanders wrote. “Raising Medicare’s eligibility shifts costs to seniors, employers and states, with the greatest burden placed on low-income seniors and those physically unable to work for two more years.”
The Umbdenstock missive also roughed up MedPAC for failing to adhere to what the AHA said is the usual process for considering policy options. Umbdenstock said that only $50 billion of the offsets MedPAC recently recommended to fix the formula were from actual commission recommendations, with the remaining $180 billion coming from Congressional Budget Office (CBO) projections and MedPAC staff estimates.


“Until now, MedPAC has followed a very rigorous process for developing recommendations that allows all commissioners the opportunity to fully deliberate recommendations and consider all their impacts, both intended and unintended, before voting,” he wrote.


In bold letters, he added: “It is inappropriate for the commission to suggest such impactful cuts when commissioners have not fully deliberated, received public comment or voted on these policies.”
He said that paying for an overhaul of the sustainable growth rate formula with Medicare cuts to hospitals and other providers is “robbing Peter to pay Paul” and “is the wrong approach.” While the commission’s main charge is to review and recommend improvements in Medicare, many activities in the health care marketplace in general affect Medicare, such as medical liability costs, he wrote.
The hospitals do support a draft recommendation by MedPAC to increase the shared savings for accountable care organizations that take part in a more risk-based ACO program.


The AMA had strongly criticized the MedPAC plan as soon as it was unveiled and followed up with a five-page letter on Oct. 3 signed by the AMA and more than 40 specialty physician groups.
The doctors said the MedPAC plan retains many of the current system’s faults, undermines physicians’ ability to take part in changes in Medicare payment and delivery systems and “calls for payment rates that the commission itself has previously said could reduce Medicare beneficiaries’ access to medical care.”


A longer list of potential offsets for the cost of the doc fix has been identified by other groups including the so-called Senate Gang of Six.


“MedPAC could and should tell Congress to rely on these existing proposals rather than offering up a new package that magnifies the size of provider and beneficiary sacrifices due to the limited scope of items within the commission’s purview,” the doctors said.