American Society of Hematology

House Energy and Commerce Committee Approves Medicare Physician Payment Reform Legislation

Published on: August 01, 2013

On July 31, the House Energy and Commerce Committee approved the amended Medicare Patient Access and Quality Improvement Act of 2013 (H.R. 2810) by a unanimous vote. The legislation would repeal the current payment formula known as the Sustainable Growth Rate (SGR), provide for a 5-year period of annual payment updates, and initiate a quality performance system in 2019.

The bill provides for an initial five years of positive updates at 0.5% per year. Beginning in 2019, physicians would have the opportunity to earn an additional 1% for successful participation in an expanded Physician Quality and Reporting System (PQRS) program. Physicians who score poorly would be subject to a cut of 1% (net -0.5%). An extensive summary of the legislation is available on the Energy and Commerce Committee Website.

One provision remains a concern to the American Medical Association (AMA) and other stakeholder groups, including ASH. The bill authorizes CMS to reduce up to 1% of payments under the physician fee schedule for services identified as misvalued. While CMS currently makes these types of reductions in the fee schedule, the cuts occur in a budget neutral manner and CMS has used reductions in some codes to increase payment in others and for new codes for primary care services. While the Committee made some changes to the provision to set the baseline for the reductions at the 2015 payment level, it is a provision that physician groups will ask to be removed from the legislation as it moves forward.

The legislation builds on proposals House Republican leadership released earlier this year. ASH submitted comments on the proposal in April, additional feedback to the Energy and Commerce Committee on its May draft legislation, and most recently submitted a letter to the Energy and Commerce Committee in early July. ASH’s latest response echoed the Society's previous comments and recommendations urging Congress to repeal the sustainable growth rate and replace it with a quality-based payment system, which includes predictable payment rates for at least five years.

In addition to the Energy and Commerce Committee moving its bill forward, the House Ways and Means Committee and the Senate Finance Committee also have jurisdiction over the Medicare program and will likely consider legislation on the SGR following the August congressional recess. In May, Senate Finance Committee leaders sent a letter to ASH requesting feedback on how to reform Medicare physician payment. The Committee also noted its interest in identifying alternative payment models that focus on volume control and performance incentives. In response, ASH submitted comments to the Senate Finance Committee reiterating the Society's message to repeal the SGR formula and replace the current payment formula with predictable payment rates for at least five years. The Society also urged the Committee to consider a new payment system that would improve the value of cognitive services, reinstate Medicare reimbursement for consultations, and utilize initiatives such as ABIM Foundation's Choosing Wisely® Campaign to reduce Medicare spending.

With a significantly reduced estimate from the Congressional Budget Office on the cost of repealing the SGR and a shared frustration among Members of Congress with the current system, Congress seems poised to finally pass legislation to reform Medicare’s physician payment system. The remaining challenge for Congress will be to identify policy changes to offset the approximately $138 billion cost of repealing the SGR.

Take Action: ASH clinicians are strongly encouraged to join the Society's on-line advocacy campaign urging Congress to repeal the current payment formula and replace it with a predictable and stable payment system.

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