MedPAC Recommends 2.7 Percent Pay Hike Under Medicare; Recommends Pay For Performance Programs for Physicians

The Medicare Payment Advisory Commission has called on Congress to increase Medicare physician reimbursement by 2.7 percent in 2006.

The recommendation is part of a 245-page MedPAC report submitted to Congress March 1. The report also asks Congress to take numerous other actions that would establish pay-for-performance (P4P) programs, standardize language used in reporting laboratory test results, and include use of information among quality measures.

In terms of P4P for physicians, MedPAC recommends measuring “quality-enhancing functions and outcomes associated with information technology (IT) use” to ascertain whether physicians provide appropriate patient care. In addition, the report proposes using claims-based process measures in the future as a less arduous method for collecting condition-specific information. However, citing the need to research the amount of information these measures provide and to expand the number of physicians who are measured, MedPAC recommends that current information retrieved from consensus-based process measures be used to provide physicians with confidential information for quality improvement purposes only. The report charges the Centers for Medicare and Medicaid Services with determining a timeline for the measures to be incorporated into the physician P4P program.

MedPAC's call for a 2.7 percent increase in physician reimbursement would add $1.5 billion to the federal budget in 2006 and an estimated $5 billion to $10 billion over the next five years. That increase was not calculated in President Bush's 2006 budget.

Currently, the number of physicians who accept Medicare is adequate to meet demand, the MedPAC report says. MedPAC surveys indicate that 77 percent of Medicare beneficiaries had "no problem" finding a primary care physician and 89 percent had no problem finding a subspecialist in 2004. In a 2003 survey, 91.5 percent of beneficiaries said they always or usually got an appointment as soon as they wanted.

Meanwhile, the number of physicians accepting Medicare patients increased by 8.8 percent from 1999 to 2003, well above the 3.6 percent increase in Medicare Part B enrollment during the same period.

The commission's recommended payment increase would "maintain access to physician care and physician willingness to serve Medicare beneficiaries," the report says. Unaltered, the current formula to determine physician reimbursement — using the sustainable growth rate — would decrease Medicare payment to physicians by 5.2 percent in 2006 and by 30 percent over the next seven years. MedPAC has called on Congress to change the reimbursement formula since 2001.

In addition to MedPAC, key congressional health committees and CMS have signaled their interest in linking a fix on the physician update for 2006 with quality initiatives. The P4P plans are attracting considerable attention from policymakers in Washington who believe they will reward quality care and make Medicare more efficient. In a meeting with ASH and other physician organizations, Congressional staff requested input on quality measures and emphasized that the Congress is reluctant to address the update issue without a P4P component. ASH will continue to follow this issue and keep you apprised of further developments.

Click here to read the MedPAC report; click on the red boxes to link to specific sections.