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Winners and Losers in MedPAC Proposal to Fix SGR – Specialists would see Pay Cut

Last week the Medicare Payment Commission (MedPAC) unveiled recommendations that would change the way physicians in the Medicare fee-for-service program would be paid. The proposal would replace the Sustainable Growth Rate (SGR) formula and, over a ten year period, would employ statutory fee schedule updates. MedPAC’s estimates suggest this plan would save the program $100 billion as compared to the cost of “freezing” pay for physicians at the current level.

MedPAC’s proposal would maintain pay for primary care providers (PCPs) over the next ten years, while reducing reimbursement for other services by 5.9 percent for three years. Reimbursement for these other services would then be frozen for the next seven years. MedPAC says the goal of structuring these recommendations in this way is to prevent an exodus of PCPs from the Medicare program.

The big question now is how to define primary care. The Commission is working on defining this term in order to determine who receives a pay cut and whose pay remains static. As with other provisions in health reform, the current proposal designates a PCP based on their declaration of specialty and requires that a certain percentage of services, 60 percent in this case, be from a list of “primary care” services. MedPAC is still mulling this over and may change the definition in their final recommendations. Some members of MedPAC estimate that with the anticipated increase in Medicare beneficiaries, PCPs would see a 2 percent increase in reimbursement over the next 10 years. Others argue that the revenue would not be enough to offset other rising costs.

In an effort to drive physicians away from the FFS model and into a more coordinated care model, the proposal would increase bonuses for physicians who participate in an Accountable Care Organization (ACO). Additionally, the proposal also encourages Congress to consider increasing the amount physicians may charge Medicare beneficiaries for a portion of services above the rate that Medicare reimburses. This practice is known as “balance billing.” Currently, physicians may balance bill patients, but only up to 10 percent more than Medicare pays.

MedPAC will vote on the recommendations at their next meeting scheduled for early October. This meeting is scheduled a month prior to the Super Committee’s November 23rd deadline for finalizing recommendations. Sources anticipate MedPAC will issue their proposal for paying for this SGR change in the coming weeks.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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