Garrett Statement on “Doc-Tricks” Bill
Washington,
Nov 19, 2009 -
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Rep. Scott Garrett (R-NJ) issued the following statement regarding H.R. 3961, the Medicare Physician Payment Reform Act of 2009.
“H.R. 3961, the Medicare Physician Payment Reform Act of 2009, is not a permanent fix for physicians. While it is well-intended to stop the 21 percent payment cut physicians face next year and the roughly 5 percent cut projected for each of the next several years thereafter, I cannot support the deficit spending in this legislation. According to the Congressional Budget Office (CBO), this bill would increase the federal deficit by more than $210 billion and would increase Medicare premiums by $49 billion. An analysis of the official data by Tom Saving, former Medicare public trustee, shows that this bill would increase Medicare’s unfunded obligations by up to $1.9 trillion over a 75-year period.
“This legislation borrows from our children's future to pay for the problems of today. I believe that Medicare should reimburse physicians fairly to ensure that Medicare beneficiaries have access to the health care they need. I also believe that Congress must be responsible in our spending, which is why I support a fiscally responsible plan that would provide physicians with a Medicare payment rate increase in each of the next four years without increasing the deficit. The cost would be offset with savings from medical liability reform, resources from the Medicare Improvement Fund, creation of a pathway for follow-on biologics, and insurance administrative simplification. This would erase the scheduled physician payment cuts for the four year period, a longer period of Medicare certainty than physicians have experienced in nearly a decade, and longer than would be provided under H.R. 3961.”
Details on the Republican plan, the Motion to Recommit:
While Rep. Garrett believes that physicians should be reimbursed fairly, he believes it must be done in a responsible way. The Republican plan:
• Increases physician Medicare reimbursement each year for the next 4 years.
• Keeps the scheduled 21.2% cut in 2010 and the roughly 5% cuts in 2011, 2012, and 2013 from occurring, and uses the remaining $26.3 billion in savings to address future cuts.
• Provides a more generous physician payment increase. According to CBO, under the Democrats’ bill, doctors would receive a 1.2% increase in 2010 (and just like under the current SGR formula doctors could still see payment cuts in 2011). By contrast the Republican MTR would provide for a 2% increase.
The plan Rep. Garrett supports contains a total of $101 billion in savings, including:
• $54 billion in savings from medical liability reform that would enact caps on non-economic damages and lawyers’ fees, encouraging speedy resolutions of claims, and limiting punitive damages, among other things. This will reduce defensive medicine, protect doctors from frivolous lawsuits, and bring down the cost of health care.
• $22.3 billion from the “Medicare Improvement Fund,” which was established under MIPPA in 2008 (Public Law 110-275) and designed to improve physician payments.
• $5.7 billion in savings from the creation of a pathway for approval at the FDA for biosimilar products (“follow-on biologics) with appropriate protections that continue to promote innovation while providing access to affordable drugs.
• $19 billion in savings through enacting health insurance administrative simplification policies such as the creation of standardized forms and transactions.
Background on Sustainable Growth Rate (SGR) System
Medicare Part B (the physician services component) payments are done through a fee schedule created by CMS in order to “accurately” reimburse for services. Congress first moved to a Sustainable Growth Rate (SGR) system under the Balanced Budget Act of 1997 due to mounting concerns over reining in the rising costs of physician reimbursements. However, this was not the first time “expenditure targets” were deployed. In 1989, Congress passed the Omnibus Budget Reconciliation Act which established Medicare Volume Performance Standards (MPVs) with three conversion factors for different categories of services. The SGR system attempted to fix the problems with MPVs by moving to one conversion factor and attaching consequences to exceeding expenditure targets that were tied to Gross Domestic Product (GDP) in order to hold reimbursement costs constant to national income.
However, every year since 2002, the SGR formula has called for cuts to reimbursement, and every year Congress has acted to override the reductions culminating in a 21.2% scheduled cut for 2010 unless Congress acts once again. It is important to note that SGR, while setting caps on payments for specific services, does not set caps on volume, thus as volume went up cuts were triggered. Numerous concerns exist with the SGR formula, including concerns with tying the target rates to GDP when many argue that the Medicare Economic Index (MEI) is a more accurate measure of medical inflation, fundamental flaws with the formula itself, or simply the government’s price setting scheme more concerned with dollars and cents than quality patient care
