I ask unanimous consent that of the 30 minutes that I control, the ranking member of the Ways and Means Committee, the gentleman from Michigan (Mr. Camp), control 15 of those minutes. I would yield…
I ask unanimous consent that of the 30 minutes that I control, the ranking member of the Ways and Means Committee, the gentleman from Michigan (Mr. Camp), control 15 of those minutes.
I would yield myself 1 minute.
Mr. Speaker, the only fix that's in this bill before us is ``the fix is in.'' This is nothing more than a repayment to the American Medical Association for endorsing the larger health care bill that was on the floor several weeks ago. There is not one dime of pay-for in this bill. It is a wave the magic wand, erase the accumulated deficit of the last 10 years or so in the SGR formula, and let's kick the can on down the road.
The bill is so narrowly construed that we couldn't offer in the motion to recommit a real pay-for because this bill doesn't have a pay- for. This is nothing more than a political payoff to the American Medical Association. Republicans support really fixing the SGR system, but we think it ought to be done all at the same time. So we would hope that we would vote against this sham today.
I reserve the balance of my time.
Parliamentary inquiry.
Under the rules that we operate where we alternate back and forth, is it allowable for myself to make a rebuttal and then recognize the gentleman from Indiana? Or do I have to do one or the other?
I am going to recognize myself for 1 minute to comment on my friend from Maryland's comments. Then hopefully the Chair will let me recognize the gentleman from Indiana (Mr. Pence) for 3 minutes.
Mr. Speaker, first of all, under Republican control, every bill that we brought to the floor, except one bill, was paid for either in that bill or in our budget resolution. There was one exception to that where we did not pay for it. So that is answer number one. Answer number two, this is not paid for. Under a bill that my friends in the majority passed in July, they say we're going to start pay-for, but it doesn't count for the doctors fix, it doesn't count for the alternative minimum tax, and it doesn't count for the estate tax.
But once we do all that without paying for it, then the pay for will kick in. So in that sense, my good friend from Maryland is accurate. But in the sense of this bill, he is totally inaccurate. This bill is not paid for.
Now, Mr. Speaker, if I am allowed to, I yield 3 minutes to my good friend from Indiana (Mr. Pence).
(Mr. PENCE asked and was given permission to revise and extend his remarks.)
I yield 1 minute to the gentleman from Kentucky (Mr. Whitfield), a member of the Health Subcommittee.
I yield myself 1 minute.
I would ask the distinguished chairman of the Health Subcommittee:
Where is the fix? There is no fix in this bill.
They split one formula into two, but there is no reform in it. It is not based on medical expenses. It is not based on anything. There is no automatic reduction. It simply erases the current deficit in the account, has two formulas instead of one, and then 4 or 5 years from now, we will kick the can down the road again.
If there really is a fix, let's have somebody on the majority side explain it. You can't explain it because it is not there.
I yield 1 minute to a member of the Health Subcommittee, the gentleman from Georgia (Mr. Gingrey).
Mr. Speaker, I yield 1\1/2\ minutes to the gentleman from Texas (Mr. Gohmert).
Mr. Speaker, I yield myself 1 minute.
Since my friends on the Democrat side won't explain their procedure, their bill, I am going to try and do it, and if I am wrong, I am sure that they will correct me.
Current law, we have one SGR formula. It is based on GDP and inflation. It is not based on any kind of medical index. Whatever that is perceived to be each year, that is the amount of increase we can pay our physicians. All physicians get the same increase.
Under this bill, they say if you are a primary care doctor, you get the formula plus 2 percent. If you are a specialist, you get the formula plus 1 percent, but they don't change the formula. The formula is the same as it is under the current law, and they don't change the enforcement mechanism. The enforcement mechanism is the same as it is under current law; i.e., Congress has to vote to either accept the cuts or to not accept the cuts and provide a temporary fix. As I understand it, that is their fix. Now, if I am wrong in that, I want my friend Mr. Waxman or Mr. Pallone or Mr. Rangel or Mr. Stark to tell me how I am wrong.
Mr. Speaker, I yield 1 minute to the gentleman from Nebraska (Mr. Terry), a member of the Energy and Commerce Committee.
Mr. Speaker, I yield 1 minute to the distinguished minority leader from the great State of Ohio (Mr. Boehner).
Mr. Speaker, could I inquire as to how much time I still control, please.
I want to yield 1 of those 3 minutes to the gentlewoman from Nashville, Tennessee, a member of the Energy and Commerce Committee, Congresswoman Marsha Blackburn.
Mr. Speaker, I'm not used to dealing with a warm and fuzzy Pete Stark. I have to admit that was a very good speech.
Mr. Speaker, I yield 1 minute to my good friend from Michigan from the Energy and Commerce Committee, Mr. Rogers.
Mr. Speaker, I yield myself the balance of the time.
I'd like to put into the Record a statement from the vice chairman of the American Medical Association on March 20, 1997, where they went on record before the Ways and Means Committee subcommittee supporting the current system. And now, I understand and I accept what Subcommittee Chairman Stark said, that mistakes have been made, and I think, in hindsight, both sides can agree that a mistake has been made.
It is my opinion, and I think most of the Republicans would share this opinion, that this is not the solution. When all you do is change which formula gets reimbursed, either primary care or specialist, but you use the same underlying formula, the same lack of enforcement, that's not, in my opinion, a fix. So respectfully, I believe that we should defeat this bill and then work together.
I do sense some bipartisanship on this floor. Let's work together to come up with a real fix. It will not be easy. It's not easy to come up with $350 billion. It's not easy to allocate that. It's not easy to change the formula to something that more accurately reflects the costs of practicing medicine in the modern era. But, we can do it. This is not the solution. I hope we'll vote this down.
As has been pointed out, this bill isn't going anywhere in the Senate. This is an act, in my opinion, of paying off a political debt to the American Medical Association for endorsing the larger health care bill several weeks ago. Please vote ``no.''
Statement of Thomas R. Reardon, M.D., Vice Chair, American Medical
Association
Mr. Chairman, my name is Thomas R. Reardon, M.D. I am a
general practitioner from Boring, Oregon, and a member of the
Board of Trustees for the American Medical Association (AMA).
On behalf of the 300,000 physician and medical student
members of the AMA, I thank you for this opportunity to
testify before the Subcommittee today regarding Medicare
physician payment issues.
A wide range of experts have independently concluded that,
despite Medicare's clear success in improving the health
status of our elderly and disabled citizens, the program
cannot be sustained without fundamental restructuring. The
Hospital Insurance Trust Fund faces bankruptcy in five years
or less, and Medicare's current overall expenditure growth
cannot be sustained. Medicare faces a much more serious long-
term problem as the ``baby boom'' generation ages and the
number of workers paying taxes for every Medicare
beneficiaries will decline from 3.9 currently to only 2.2 in
the year 2030.
The high growth rates for many of the services are due to a
combination of factors, including increased beneficiary
demand for new services, flaws in payment rules which
encourage high volume growth in some categories of service,
insulation of most beneficiaries from cost considerations,
and ineffective approaches to cost control. However, as the
chart below indicates, physician spending growth is well
below the rate for any other major sector of Medicare, and
well below overall Medicare growth. The AMA is pleased that
the President's 1998 budget proposal explicitly recognizes
this fact.
We are also pleased that the Administration's budget
supports the development of innovative provider sponsored
organizations in order to offer greater choice to Medicare
beneficiaries. We believe these types of options hold the
promise of enhancing beneficiary choice while controlling
Medicare's costs. The AMA also supports the President's
investment in preventive health care to improve seniors'
health status by covering colorectal screening, diabetes
management, and annual mammograms without copayments, and by
increasing reimbursement rates for immunizations to ensure
that Medicare beneficiaries are protected from pneumonia,
influenza and hepatitis.
Unfortunately, the Administration's budget primarily adopts
the strategy of cutting physician and other provider payments
in hopes of getting more services for less money. We believe
this approach will ultimately divorce the Medicare system and
its beneficiaries from the mainstream of American medical
care, while postponing the major restructuring needed for
Medicare's long-term survival. In the meantime, the long-term
problems will only grow larger, requiring more draconian and
expensive solutions.
AMA's Proposal For Medicare Transformation
The AMA has a plan which addresses both the short and long-
term problems with Medicare, while preserving the bond of
trust between a patient and physician that makes medicine
unique. The AMA's Transforming Medicare proposal is based on
the idea of a competitive market-driven system as the best
option for the future of the Medicare program because it
offers more choice to senior citizens and the disabled. We
must give the patient both the opportunity and the
responsibility to make wise prospective choices of physician
and health plan, with the reasonable opportunity to change
either if they prove unsatisfactory.
Our plan would modernize traditional Medicare, eliminating
the need for Medigap, while preserving the security and
quality of care beneficiaries now receive. It would create a
new MediChoice option, which would provide a broad menu of
health plan choices for Medicare beneficiaries to choose
from, including medical savings accounts and provider
sponsored organizations. And finally, it would ensure that a
healthy Medicare is available for future generations. The AMA
would welcome the opportunity to discuss our Transforming
Medicare proposal with the Subcommittee in greater detail at
an appropriate forum.
Improving the Physician Payment System
The Administration's 1998 budget proposal targets $5
billion in savings over five years from refinements to the
Medicare physician payment schedule. In particular, the
Administration proposes moving to a single conversion factor
(CF) for the payment schedule, and replacing the current
Medicare Volume Performance Standard (MVPS) update formula
with a Sustainable Growth Rate (SGR) formula.
Under the Administration's budget proposal, the overall
payment update for 1998 would be set at 1.9%, yielding an
overall CF of $36.63 in 1998. With the move to a single CF of
$36.63, surgical service payments would fall by 10.6%
compared to 1997 levels, while primary care payments would
increase by 2.4% and other service payments would increase by
8.2%. The payment reductions for surgical services are
further exacerbated by the implementation of resource-based
practice expense relative value units scheduled for 1998, as
discussed below.
The AMA has consistently sought a return to a single growth
standard and conversion factor for physician services. We
adopted this position well before any indication of which
services would benefit from multiple standards. At our Annual
House of Delegates meeting in 1996, AMA policy was modified
to adopt a compromise that responds to two realties. First,
because moving to a single conversion factor could lead to
large single year cuts for some services and specialties, we
support a transition of as close to three years as possible.
Second, because we also recognize that one of the purposes of
a transition is to allow those who face cuts time to adjust,
and that there has been ``fair notice'' of a shift to a
single conversion factor, our House of Delegates voted that
the ``clock should start running'' on such a transition on
January 1, 1997.
In addition to moving to a single conversion factor, the
AMA supports replacing the MVPS system of updating physician
payments. There is widespread agreement that the current
method of updating physician payments, the MVPS system, is
fundamentally flawed. The Congress, the Administration, and
the Physician Payment Review Commission (PPRC) have all
proposed replacing the current MVPS update formula with a
sustainable growth rate (SGR) formula, which uses real per
capita gross domestic product (GDP) to adjust for volume and
intensity.
The Administration's fiscal year 1998 budget proposes
implementing an SGR formula, with the volume target in the
SGR formula initially set at growth in real per-capita GDP
plus one percentage point. However, the Congressional Budget
Office (CBO) scoring of the proposal apparently failed to
yield the targeted savings of $5 billion in savings from the
Medicare fee schedule, and the volume allowance in the SGR
was reportedly reduced to GDP+0.
In general, the AMA supports implementing the SGR approach
as a needed correction for the MVPS. Fundamentally, the
question for policymakers is determining the level of annual
spending growth for physician services that best balances
patient care
needs and the federal budget. Under the current MVPS
physician update formula, the projected Medicare payment
level for physicians is a steep actual decline, while
hospital and other provider payment rates go up, as the chart
below indicates. Although these non-physician services are
unlikely to see their full projected increases, their
budget savings will be charged against this rising
baseline, while further savings from physicians require
even steeper cuts.
Budget reconciliation for Medicare should reflect the fact
that physician spending is under better control than any
other major Medicare segment, and that the budget baseline
already assumes steep annual payment cuts. Physician practice
costs, as measured by the Medicare Economic Index (MEI),
continue to rise while physician reimbursement under Medicare
is projected to fall. Physicians are only asking for the
opportunity to have Medicare payments keep up with the costs
of providing care to Medicare beneficiaries, and are willing
to accept the challenge of maintaining volume growth at
current low levels.
While we believe that MEI is the appropriate goal for
physician updates, we understand that budgetary constraints
may not presently allow for a full MEI update for physicians.
Physicians are willing to do their part to put Medicare's
fiscal house in order, as we have repeatedly done in the
past. Physicians, who accounted for 32% of combined physician
and hospital Medicare spending from 1987 to 1993, absorbed
43% of Medicare provider cuts over the same time. We would be
willing to accept GDP+2 under an SGR system as a temporary
measure, if there were assurances that this could be
increased to cover MEI once the necessary Medicare savings
were obtained. In contrast, under GDP+O as the Administration
proposes, physician payments would continue to fall well
below MEI, as they are projected to do under the current MVPS
system.
Given a new SGR, with a realistic growth allowance, we
could also support a new ceiling on positive MVPS
adjustments, which would provide direct financial benefits to
the federal budget if actual volume is below target.
Moreover, the federal government receives a very real
additional benefit--the ability to pay for the payment rates
needed to maintain the viability of Medicare fee-for-
service out of reduced service volume. At the same time,
like the PPRC, we believe it essential to maintain the
current 5% maximum payment reduction from the MEI
(increased from 3% by OBRA 93) and to reject
Administration proposals to lower the floor to MEI minus
8.25%.
Resource-Based Practice Expense
As mentioned above, many physicians face additional extreme
payment reductions due to the implementation of the resource-
based practice expense in 1998. The Social Security Act
Amendments of 1994 requires the Health Care Financing
Administration (HCFA) to implement a ``resource-based''
practice expense component of the Medicare fee schedule by
January 1, 1998. That is, the payment for this component--
which represents over 40 percent of the payment for physician
services--is to be based on the actual expenses incurred in
delivering each service. Currently, the practice expense
allowance is derived from a formula based on the prior
reasonable charge payment system.
The AMA supports resource-based practice expenses so long
as they reflect actual practice expenses, but is seeking a
one-year extension of the implementation date. The 1994
legislation said that HCFA should ``recognize the staff,
equipment, and supplies used in the provision of various
medical and surgical services in various settings.'' HCFA
contracted with Abt Associates to conduct a two-part study of
3,000 physician practices expenses. When the survey was
pulled back due to poor response rates, HCFA was left without
adequate data to meet the intent of the law.
HCFA is relying primarily on data derived from clinical
practice expert panels, or CPEPs. Early review of the
recently-released CPEP findings suggest that they contain a
number of errors. HCFA has even rejected certain direct costs
that its expert panels found were part of the cost of surgery
when doctors supply their own staff and supplies in hospital
operating rooms. The AMA and medical specialties are working
to identify and correct those flaws but more time is needed.
Those who want to adhere to the current January 1, 1998,
deadline argue that any problems can be corrected later
through a refinement process similar to the one used when new
work values were implemented in 1992. The AMA believes this
is an inappropriate comparison. HCFA invested nearly three
times as much time and money on the design of new work values
as it has spent to revise practice expense values. Whereas
thousands of doctors were surveyed to come up with the work
values, in the end, there was no broad survey of practice
expenses. Simply put, with work values, the product being
tested was much further along in the development process than
is now the case with practice expense values.
Opponents of an extension also maintain that there is no
point in waiting another year because the demise of the
indirect cost survey shows that it will never be possible to
collect this information independently. We believe that with
another year, HCFA could develop alternative relative values
that bear some relationship to actual practice expenses.
There would be adequate time to validate and correct the CPEP
data. Better indirect cost allocation methodologies could be
developed and tested. Missing data could be collected,
perhaps through an expansion of existing surveys.
The cuts HCFA projected in January are so extreme that they
would nearly eliminate practice cost reimbursement for some
procedures and specialties. Many inpatient surgical
procedures and two specialties could suffer cuts of more than
80% in their practice expense values, and at least 40% in
their total payments. Under HCFA's projections, payments for
many surgical procedures would fall below Medicaid levels.
Thus, there is good reason to fear that if Medicare makes
deep cuts in its payments for complex procedures, doctors
performing these services may find that they can no longer
afford to accept Medicare patients.
In addition, even some of the specialties which seem
relatively unscathed in HCFA's projections could actually
experience significant cuts if other payers pick up the new
Medicare values because the projections do not show the
impact of cuts in procedures usually done on patients under
age 65. To impose such deep payment cuts based on such spotty
research seems certain to undermine physician support for the