Bill would scrap Medicare formula, raise physician reimbursement

The new House measure also would allow doctors who participate in voluntary quality reporting to balance bill some of their Medicare patients.

By David Glendinning, AMNews staff. Aug. 14, 2006.

Washington -- Lawmakers hoping to negotiate long-term physician payment reform that more closely aligns Medicare rates with the costs of administering care have a new piece of legislation with which to work.

Rep. Michael Burgess, MD (R, Texas), late last month introduced the Medicare Physician Payment Reform and Quality Improvement Act of 2006, which, starting in 2007, would scrap the sustainable growth rate formula that helps determine doctor pay. Instead, the Burgess bill would ensure positive annual updates by tying rates to the Medicare Economic Index. The MEI is an indicator of how much doctors' cost of caring for patients is increasing.

If lawmakers and the White House can approve the measure before Congress adjourns for the year, physicians would start receiving yearly updates equal to the MEI percentage minus 1%. Instead of a projected 4.7% cut in January 2007, doctors would receive an estimated 1.5% increase in their Medicare rates.

Dr. Burgess said that the changes would stop physicians from being punished when they exceed pre-determined Medicare spending limits that have nothing to do with medical need.

"This eliminates the negative feedback loop that constantly creates a deficit in health care funding and introduces a more market-sensitive system," the obstetrician-gynecologist said on the House floor.

The introduction of the bill drew praise from physician groups, including the AMA. "This bill is a major step toward ensuring health care access for seniors," said AMA Chair Cecil B. Wilson, MD. "We are encouraged by the introduction of this legislation that would replace the current flawed Medicare formula with one that better ensures that payment rates keep up with the increasing costs of practicing medicine."