Medicare SGR system is under scrutiny. Image Source: Everything Electric Wheelchairs

The House Ways and Means Subcommittee on Health held a hearing on Sept. 11 with the goal of re-examining and reforming the way physicians are paid under the current Centers of Medicaid & Medicare (CMS) system.

According to the American College of Radiology (ACR), Democrats and Republicans have come to realize that the Medicare’s sustainable growth rate (SGR) is a flawed system and an unsustainable way to reimburse physicians.

 “Whoever came up with the name [for the formula] had an ironic sense of humor because there is nothing sustainable about it,” Chairman Pete Stark, D-Calif., said in his opening statement to the subcommittee.

Bruce Vladeck, MD, and Gail Wilensky, MD, two former CMS administrators, as well as Donald Crane, the CEO of the California Association of Physician Groups, and Nancy Nielson, MD, president of the American Medical Association (AMA) testified at the hearing.

In her testimony, Nielsen highlighted that reform is necessary to achieve the vision of a healthcare system that provides quality, cost-effective care.

“By stopping Medicare physician payment cuts until January 2010, Congress has provided us with an opportunity to roll up our sleeves and work together on payment reforms that will benefit patients,” Nielsen said. The proper legislative action “will result in Medicare payments that accurately reflect increasing medical practice costs so that physicians can continue to improve the care they provide to Medicare patients,” she said.

Nielson called for demonstration projects to refine bundled payment initiatives and emphasized that physicians must be encouraged to provide the right treatment at the right time. She acknowledged that “reimbursement for [7,000] individual services is not reasonable.”

Crane said that fee for service results in “churning, duplication and overuse” adding that, “capitation leads to frugality and leads to preventative care and early intervention” and works very well particularly in large group practice models.

Other witnesses also urged a move to multi-speciality group practice models. “We will never develop adequately satisfactory alternatives to our current payment methods until a far larger proportion of American physicians are organized in multi-specialty group practices, whether free-standing or hospital-based. Such practices outperform other models of physician organization in cost, quality, and care coordination,” Crane said.

Ways and Means Committee is expected to craft some type of physician payment reform measure in 2009, according to the ACR.

However, Stark commented on the enormity of the challenge facing lawmakers. “I have no plan in mind and quite frankly no one does,” he concluded. 

“It is critical to gain widespread physician input and consensus for these reforms in order to make the Medicare program strong and sustainable," Nielsen said. “We need to collaborate to create a flexible, multi-pronged approach to reform so that our nation can fulfill the promise of Medicare for America's seniors and the physicians who care for them.”