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Medicare Physician Payment Reform Act

On November 19th, the House passed the Medicare Physician Payment Reform Act (HR 3961), companion legislation to the Affordable Health Care for America Act. This bill will prevent a 21 percent cut in Medicare physician payment rates scheduled for January 2010.  Instead of temporarily overriding the cut as Congress has done six times before, H.R. 3961 will replace the broken Sustainable Growth Rate (SGR) formula, correcting a decade of Republican mismanagement of the Medicare program with a permanent, sustainable solution.  Ultimately, the legislation protects access to physicians for Medicare beneficiaries and members of the military and their families since physician payment rates in TRICARE are tied to those used by Medicare.

The bill is supported by a wide range of organizations representing patients, doctors and other providers, including the American Medical Association, AARP, the Military Officers Association of America, the American Academy of Family Physicians, the American College of Physicians, the American College of Surgeons, the Center for Medicare Advocacy, the Medicare Rights Center, and the National Committee to Preserve Social Security and Medicare.

Permanent reform of physician payments in Medicare will guarantee that Medicare beneficiaries continue to enjoy the excellent access to care that they do today.  It will also follow the President's lead by ending a budget gimmick that artificially reduces the deficit by assuming physician payments will be cut by 40 percent over the next several years even though Congress has consistently intervened to prevent those cuts from occurring.  The White House released a Statement of Administration Policy in strong support of the bill saying:

  • 'The Administration strongly supports House passage of H.R. 3961, the Medicare Physician Payment Reform Act of 2009, and appreciates congressional efforts to ensure that Medicare beneficiaries and TRICARE patients continue to have access to care and their physician of choice.”
  • “The Administration is pleased that the bill would eliminate the steep payment cut scheduled for 2010.  A cut of this magnitude could reduce access to physicians for Medicare beneficiaries throughout the country.”
  • “H.R. 3961 is an important step forward in comprehensively reforming the way Medicare pays physicians to provide the very best care to the Nation's Medicare beneficiaries and the Administration urges the Congress to pass this legislation.”

Permanent Physician Payment Reform

  • Preserves seniors' access to their doctors with a guaranteed update in 2010. Replaces the pending 21 percent fee cut with an update for 2010 based on the Medicare economic index while a new payment system is being put in place.
  • Fairer growth targets to keep doctors' pay steady. Wipes away accumulated deficits from current spending targets to provide for a fresh start, but still holds physicians accountable for spending growth. Excludes items not paid under the Medicare physician fee schedule such as chemotherapy drugs and laboratory services from revised growth targets.
  • Promotes primary care that can keep you healthier longer. Provides an extra growth allowance for primary care services to promote access to primary care practitioners in Medicare and throughout the health care system.
  • Encourages integrated care so your doctors communicate on your care. Encourages the formation of Accountable Care Organizations which incentivize physicians to take responsibility for improving quality and reducing costs. Accountable Care Organizations may 'opt out' of the national spending targets and establish their own organization-specific targets.

Fiscal Responsibility

The Medicare Physician Payment Reform legislation will be considered in the House under a procedure which will add the text of H.R. 2920, the Statutory PAYGO Act of 2009, as passed by the House on July 22nd before being sent to the Senate.  The 'pay as you go' principle of budget discipline requires Congress to find a way to pay for any new spending, outside of an economic crisis.  The Statutory PAYGO Act would make that principle law.  A previous Congress established the policy for paying Medicare doctors, so the update for 2010 is not a new policy to be paid for.  The Statutory PAYGO Act would apply this principle to all new tax and spending policies, and would allow Congress to exclude the impact of continuing policies currently in place, including Medicare payments to physicians.  The Medicare Physician Payment Reform Act would not increase total payments to physicians above what they are today and therefore, would not be subject to the paygo requirement.