House Passes Reform Of Medicare Physician Payment System

WASHINGTON, D.C. – Today the House passed legislation that would permanently reform the broken Medicare physician payment system. The "Medicare Physician Payment Reform Act" (H.R. 3961) passed by a vote of 243-183. The bill repeals a 21 percent fee reduction scheduled for January 2010, and replaces the physician payment formula with a more stable system that ends the unrealistic cycle of threats of ever-larger fee cuts followed by short-term patches. The bill also includes statutory PAYGO legislation.

The reforms in H.R. 3961 will guarantee that beneficiaries continue to enjoy the excellent access to care that they do today. It will also follow the President's lead by ending a budget gimmick that artificially reduces the deficit by assuming physician payments will be massively cut over the next several years, even though Congress has consistently intervened to prevent those cuts from occurring.

"Congress has an obligation to make sure seniors, people with disabilities and our men and women in uniform continue to have access to the care they need, and doctors are fairly compensated for their important work," said Ways and Means Committee Chairman Charles B. Rangel (D-NY). "Today's bill strengthens Medicare and helps in our overall effort to reform our health care system and improve the reliability and quality of care for millions of patients nationwide."

"Today the House has taken an important step towards permanently solving a problem for seniors and their physicians who are partners in the Medicare program," said Energy and Commerce Chairman Henry A. Waxman (D-CA). "With this legislation, we are putting in place a more responsible and stable system."

"Today we have passed legislation that will end years of budget gimmicks and temporary patches that have dug us into a budgetary hole," said Ways and Means Health Subcommittee Chairman Pete Stark (D-CA). "This bill ensures that seniors and people with disabilities continue to have access to their doctors, and that doctors in Medicare won`t face uncertainty year-to-year about their payment rates."

"The most important purpose of this is to help senior citizens get the doctors and the health care they want and need," said Energy and Commerce Health Subcommittee Chairman Frank Pallone (D-NJ). "The improvements that will be made to Medicare will be permanent. The health reform bill will close the donut hole and extend the financial solvency of Medicare. Now we will strengthen the program so that it retains the best doctors with the right compensation."

"The passage of this bill fulfills a long overdue promise to our doctors that they will be paid appropriately for their services, and it is essential to ensure that our Nation`s seniors and military families continue to enjoy uninterrupted access to their doctors," said Energy and Commerce Chairman Emeritus John D. Dingell (D-MI). "Due to our failure to fix this problem permanently the price tag has grown each year. In 2005, the cost of fixing the problem was $48 billion. Today-just 4 years later-the cost is $210 billion. We can no longer kick the can down the road-that is fiscally irresponsible. I am proud that today the House of Representatives made the choice to protect our seniors in Medicare and military families with a permanent fix to this perennial problem."

Under the legislation passed today, the Sustainable Growth Rate (SGR) is replaced with a new formula that:

• Removes items such as drugs and laboratory services not paid directly to practitioners from spending targets;
• Allows spending on most services to grow at the rate of GDP plus 1 percentage point per year (compared to GDP without any adjustment today);
• Allows spending on primary and preventive care services to grow at GDP plus 2% per year; and
• Encourages coordinated, innovative care by allowing Accountable Care Organizations to be responsible for their own growth paths, irrespective of reductions or increases that apply elsewhere in the system.

This bill was considered in the House under a procedure that added the text of H.R. 2920, the Statutory PAYGO Act of 2009, as passed by the House on July 22nd before being sent to the Senate. The "pay as you go" principle of budget discipline requires Congress to pay for any new spending, outside of an economic crisis. The Statutory PAYGO Act would make that principle law.

For a list of groups that support H.R. 3961, click here.

For a summary of the "Medicare Physician Payment Reform Act," click here.

For a fact sheet about how the bill affects the federal budget, click here.

For the bill text of the "Medicare Physician Payment Reform Act," click here.

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