FAQ: Congress Passes A Bill To Fix Medicare’s Doctor Payments. What’s In It?

As expected, the Senate Tuesday night easily passed legislation to scrap the formula, accepting a bipartisan plan muscled through the House last month by Speaker John Boehner and Democratic leader Nancy Pelosi. The Senate vote came just hours before doctors faced a 21 percent Medicare pay cut.

Q: How would the bill change the way Medicare pays doctors?

The House package would scrap the old Medicare physician payment rates, which were set through a formula based on economic growth, known as the “sustainable growth rate” (SGR). Instead, it would give doctors an 0.5 percent bump in each of the next five years as Medicare transitions to a payment system designed to reward physicians based on the quality of care provided, rather than the quantity of procedures performed, as the current payment formula does. That transition follows similar efforts in the federal health law to link Medicare reimbursements to quality metrics.

The measure, which builds upon last year’s legislation from the House Energy and Commerce and Ways and Means committees and the Senate Finance Committee, would encourage better care coordination and chronic care management, ideas that experts have said are needed in the Medicare program. It would reward providers who receive a “significant portion” of their revenue from an “alternative payment model” or patient-centered medical home with a 5 percent payment bonus. It would also allow broader use of Medicare data for “transparency and quality improvement” purposes.

House Energy and Commerce Committee Chairman Fred Upton, R-Mich., one of the bill’s drafters, has called it a “historic opportunity to finally move to a system that promotes quality over quantity and begins the important work of addressing Medicare’s structural issues.”

A “technical advisory committee” will review and recommend how to develop alternative payment models. Measures will be developed to judge the quality of care provided and how physicians will be rewarded or penalized based on their performance.  While the law lays out a structure on how to move to these new payment models, much of their development will be left to future administrations and federal regulators.  Expect heavy lobbying from the physician community on every element of implementation.