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Senate leaders: It’s time to fix doctor Medicare payments

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Top federal lawmakers say the time has come to overhaul the way physicians are paid under Medicare, a long-standing problem that encourages medical providers to offer more procedures instead of seeking to improve the quality of care.

Senate Finance Committee Chairman Max Baucus, Montana Democrat, said Tuesday that Congress has a window of opportunity to repeal the "sustainable growth rate" formula used to calculate doctor payments and replace it with a more predictable, statutorily defined system.

"We must permanently repeal this broken formula and we need to do it this year," he said at a hearing on paths to reform.

Other lawmakers and witnesses agreed, noting the nonpartisan Congressional Budget Office recently dropped the estimated cost of freezing payments and reforming the system by about $100 billion.

Congress has circumvented the 1997 Medicare payment formula each year through the "doc fix," a fiscal patch that maintains physicians' payments from the government even when the formula calls for a cut. Mr. Baucus said Congress has acted to stave off the cuts 15 times since 2003, including six times in 2010 alone.

The discussion came on a day when federal law enforcement authorities announced the arrest of 89 people, including doctors and nurses, in eight cities in their suspected participation in Medicare fraud schemes involving more than $223 million in false billings.

Last month, the Congressional Budget Office significantly lowered its estimate of what it would cost to repeal the formula — and pay doctors the current rate — from $245 billion over the course of 10 years to $138 billion.

Although health care spending due to the volume of services has slowed in recent years, history suggests these costs likely will rise again, witnesses said Tuesday.

Therefore, lawmakers and others agree they need to act quickly. And there is bipartisan support in both chambers of Congress to get it done.

Despite the headwinds for repealing Medicare's flawed formula used to pay doctors, lawmakers are searching for a way to pay for the repeal and couple it with workable reforms, witnesses testified Tuesday.

Mark E. Miller, executive director of the Medicare Payment Advisory Commission, told the finance panel that Congress should repeal the sustainable growth rate formula and write a 10-year set of fee-schedule updates into law so doctors — and the seniors they serve — do not live with uncertainty from year to year. He said payments to primary-care providers should be frozen, but doctors who specialize in medical procedures should see an annual reduction of 5.9 percent for three years, followed by a freeze.

That, he said, should create more parity between specialists and primary-care doctors, the latter of which are in short supply and seen as key to any hopes for health care reform.

Congress' ability to act could reshape the bitter debate over the nation's debt problem. 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.

President Obama has said he is willing to take on Medicare and "push my Democratic friends to do hard things."

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