Senate Finance Committee Explores Physician Payment Reform

Good momentum, if not action, about Medicare payment reform

Senate Finance Committee Explores Physician Payment Reform

What

The U.S. Senate Finance Committee is considering how to improve the Medicare payment formula for physicians. In May, Senate Finance Committee (SFC) Chair Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) released a white paper explaining reimbursement challenges and potential policy reforms. The Medicare Physician Fee Schedule (PFS) governs physician pay with a formula that considers resources needed to perform a service, the physician’s geographic area, and multiplying that by a conversion factor. The PFS does not annually adjust for inflation, however, leading to sustainability concerns. The SFC white paper proposes implementing reforms around the conversion factor, but also improving quality measurement, investing in primary care and chronic care treatment, and making telehealth more accessible through removing restrictions for certain patients and providers. In addition to incentivizing value-based care, the SFC is interested in sustainable payment reform that allows healthcare professionals to own and operate their own practices.

When

Senators Wyden and Crapo published the white paper on May 17, 2024.

Key Highlights

  • Physicians and other medical groups have long favored reforming Medicare’s physician reimbursement. Because it isn’t adjusted for inflation, physician pay lags behind rising costs of performed services. Experts like the Medicare Trustees and MedPAC Commissioners have expressed that this is a long-term sustainability issue and will affect access to physicians, which in turn, will impact access to care.
  • Under Medicare’s current budget neutrality provision, CMS is required to adjust PFS to be budget neutral if annual spending is increased by over $20 million. This means that when some clinical specialties experience pay increases, others must decrease. The white paper encouraged changes to budget neutrality requirements that may allow for flexibility with pricing adjustment.
  • The white paper also discussed how the current systems to reimburse physicians participating in advanced alternative payment models are not always aligned to meaningfully advance value-based care. Additionally, as it exists, the Merit-based Incentive Payment System (MIPS) can cause undue burden on providers without results of improving care or lowering costs. The white paper explores solutions and poses questions on how best to reform both.

Bottom Line

The Senate Finance Committee’s white paper highlights the need for change to establish sustainability in physician pay and address the demand for chronic disease management in Medicare’s beneficiary populations. Chairman Wyden’s specific interest in improving chronic disease may be important to specialists, as they are cited to play important roles in chronic care management. Specifically, the white paper highlights challenges of integrating specialists into value-based payment models. It will take a long time before legislative solutions are discussed and voted on, but orthopaedic surgeons should keep an eye on the payment reform debate for future opportunities to weigh in on more specific policy recommendations.

Sources

Pifer R. Senate Finance Committee Tackles Medicare Physician Pay Reform. Healthcare Dive. Accessed June 25, 2024.

US Senate Committee on Finance. Bolstering Chronic Care Through Physician Payment: Current Challenges and Policy Options in Medicare Part B. Accessed June 25, 2024.

US Senate Committee on Finance. Wyden and Crapo Release White paper for Medicare Doctor Pay Reform. Accessed June 25, 2024.