Heck proposes to replace Medicare doctor payments

WASHINGTON - Rep. Joe Heck on Wednesday proposed overhauling the way Medicare reimburses doctors, scrapping a system that has called for deep payment cuts in recent years and is leading some physicians to stop seeing Medicare patients.

Heck, R-Nev., and Rep. Allyson Schwartz, D-Pa., introduced a bill that repeals the Sustainable Growth Rate reimbursement formula that Congress put in place in 1998.

In its place, the bill sets a new payment schedule for the next five or six years until Medicare managers can devise a menu of alternatives that doctors would select as their preferred methods of payment depending on their specialties, where they practice and whether they practice on their own or in groups.

"To me there is no single greater threat to Medicare than the SGR," Heck said Wednesday during a briefing alongside Schwartz. "We can talk about how we are going to try to sustain Medicare funding, but if you don't have practitioners who are willing to participate, it really doesn't matter whether the program is funded."

Schwartz has been advocating the Medicare change for months. Heck, who is an osteopathic physician, signed on as the chief Republican sponsor in the House with responsibility to build support among GOP lawmakers.

Congress is expected to revisit the Medicare issue later this year, as it has done regularly over the past decade whenever the reimbursement formula has threatened to limit doctor payments, fueling a small but growing number of physicians to drop out of the program.

A January memo from the inspector general at the Centers for Medicare and Medicaid Services estimated the physician dropout rate from Medicare at "perhaps less than 1 percent" but said that the number has increased each year from 2006 to 2010.

The Sustainable Growth Rate formula was devised to control spending by tying Medicare costs to growth in the economy generally. But as medical costs began growing faster and faster, the SGR each year since 2002 has recommended cuts in doctor reimbursements to keep the program in balance.

Each time except for 2002 Congress has passed bills to reject or delay the reductions.

A "doc fix" bill passed last fall avoided a 27 percent reduction in what Medicare doctors submitted as reimbursements for treating seniors. The formula calls for a 30 percent reimbursement cut for 2013.

If allowed to go into effect, the reimbursement cut would mean a loss of an average $33,000 per physician in Nevada, according to the American Medical Association.

Congress has passed 14 short-term patches to Medicare over the past 10 years.

"The more we kick the can down the road and do these interim patches, the less stability and predictability there is for physicians and the more unwilling they are going to be to stay in the program," Heck said.

The Obama administration, a range of medical associations and most members of Congress have called for the reimbursement formula to be changed, but one sticking point has been the $300 billion transition cost.

Heck and Schwartz propose to pay for their bill using savings from the wind-down of the wars in Iraq and Afghanistan, an offset that has been criticized as a budget gimmick when lawmakers have tried it for other bills.

Schwartz said she expects the Medicare bill to be changed by Congress. She said its aim is to admit the reimbursement system "is a failed policy that was not going to work and hasn't worked, so it is time for us to get past it."

Contact Stephens Washington Bureau Chief Steve Tetreault at stetreault@stephensmedia.com or 202-783-1760. Follow him on Twitter @STetreaultDC.