Study adds fuel to fire in push for entitlement reform

The push to reform federal payments to doctors who treat Medicare patients picked up steam Monday when physicians released a study arguing that halting unneeded services could save hundreds of billions of dollars.

A 19-page report released Monday by the National Commission on Physician Payment Reform adds a voice to the chorus of politicians in Washington who say entitlement reform is the key to restoring the nation’s fiscal footing, and that doctors should be paid for quality of care instead of the number of services they provide.

Among its dozen recommendations, the commission calls for the outright repeal of a 1997 Medicare payment formula, though Congress avoids it each year through the “doc fix,” a fiscal patch that maintains physicians’ payments from the government even when the formula calls for a cut.

Federal lawmakers, particularly select committees in the Republican-controlled House, have made the repeal of the formula, known as the sustainable growth rate, one of their key priorities in the new Congress.

Last month, the Congressional Budget Office significantly lowered its estimate of what it would cost to repeal the sustainable growth rate and pay doctors the current rate from $245 billion over the course of 10 years to $138 billion. While the drastic reduction in its price tag makes the goal more viable, the question of pinpointing the off-setting cuts is “a thorny one that has generated a wide variety of responses,” the commission said in its report.

Yet the 14-member panel co-led by former Senate Majority Leader Bill Frist, a surgeon by trade, says it knows where to look, citing a 2011 Institute of Medicine report that found more than $750 billion in excess costs from six key issues: overuse of medical services, inefficient delivery of service, high administrative costs, missed prevention opportunities, fraud and prices that were simply too high.

Commission Chairman Steven Schroeder said he hopes people will look at their recommendation and “say it makes a lot of sense,” but he has realistic expectations about consensus on Capitol Hill.

“If I bet a lot of money on what would happen in politics,” he said, “I’d be a lot poorer than I am now.”

Reps. Allyson Y. Schwartz, Pennsylvania Democrat, and Joseph J. Heck, Nevada Republican, put forth the bill to replace the sustainable growth rate with more predictable payments based on quality of care. Their goal is generally supported by the commission’s new report, which calls for a five-year transition into a fixed-payment system after ample testing of various models.

Mr. Schroeder said his commission did not pay much attention to activity on the Hill when it crafted its proposals, but its report does find common ground with the bipartisan legislation and a proposal from the House Committee on Energy and Commerce that was distributed last month.

Physicians’ groups have widely supported the legislative efforts, citing the uncertainty surrounding looming cuts each year ahead of the “doc fix” and the need for a permanent solution.

Jeremy A. Lazarus, president of the American Medical Association, said many of the commission’s ideas are consistent with the association’s policies, but noted that “much of this report reflects the view of only one specialty and does not reflect the broad, diverse field of medicine.”

The insinuation was that the report offers an internist’s point of view, since the commission was created by the Society of General Internal Medicine.

Mr. Schroeder said the likelihood of entitlement reform is greater than ever amid budget constraints and the public debate over spending.

Prominent Republicans have said entitlement reforms must be the precursor to any grand bargain that includes new revenues in the politically risky debate over the nation’s fiscal path. And President Obama, addressing across-the-board spending cuts that took effect last week, told reporters on Friday he is be willing to take on Medicare spending and “push my Democratic friends to do hard things.”