A House bill introduced last month would stop an approximate 30% Medicare pay cut next year by repealing the program’s sustainable growth rate (SGR) formula and phase out its fee-for-service payment system.

In addition, the “The Medicare Physician Payment Innovation Act of 2012” states it would stabilize current payment rates to ensure beneficiary access in the near-term, eliminate scheduled SGR cuts, and create incentives for undervalued primary, preventive and coordinated care services.

“With the growing Medicare uncertainty facing all physicians and our patients, the AOA is encouraged by a number of emerging bipartisan proposals aimed at transforming Medicare’s broken payment system into one that ensures stable and fair reimbursement, safeguards our full-scope role, and respects our relationship with our patients,” says Roger Jordan, O.D., chair of the AOA Federal Relations Committee. “As Congress and the White House dig deeper into the details in the coming weeks and months, the AOA will continue working to lock-in our recent payment and other gains that fully recognize optometry’s essential primary care role in Medicare.”

The bill is sponsored by Rep. Allyson Schwartz (D-PA) and Rep. Joe Heck, M.D. (R-NV). Key points of their bill include:

• Repeal the sustainable growth rate permanently: By eliminating the $300 billion debt to the Medicare program, this provision aims to restore stability and fiscal transparency to the payment system, and attempts to establish a clear path to comprehensive payment reform. The cost of the repeal is expected to be offset from the savings based on the reduction in military operations in Iraq and Afghanistan.
• Stabilize the current payment system: 2012 payment levels would be maintained through December 31, 2013. From 2014 to 2017, Medicare would raise rates by an annual 2.5% for primary care, preventive and care-coordination services. Rates for all other physician services would increase by 0.5% annually. The differential represents an attempt to emphasize primary care over procedure-oriented specialty care, according to the bill.
• Reward clinicians for high-quality, high-value care while disincentivizing fragmented, volume-driven care: In 2018, new payment models that reward physicians for “high quality, high value care,” as opposed to the volume of services, will be introduced. These new models will build on Medicare demonstration projects now underway for accountable care organizations, medical homes and shared savings.
  
• Because 2018 is considered a transitional year, Medicare will continue to pay physicians on a fee-for-service basis, but only at 2017 levels. Beginning in 2019, physicians who stick with fee-for-service reimbursement will suffer pay cuts: 2% in 2019, 3% in 2020, 4% in 2021, and 5% in 2022. Fee-for-service rates will remain frozen at 2022 levels in the years beyond. In contrast, physicians participating in the new payment models “will continue to receive stable reimbursement” with the opportunity to earn even more based on their performance.”

At press time, the bill had been referred to the House Energy and Commerce Committee for further consideration.