II 109th CONGRESS 2d Session S. 3888 IN THE SENATE OF THE UNITED STATES September 12, 2006 Ms. Stabenow introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend title XVIII of the Social Security Act to sunset the sustainable growth rate formula as of January 1, 2009, in order to expedite Congressional action in establishing a new physician payment system that would appropriately reimburse physicians by keeping pace with increases in medical practice costs and providing stable, positive Medicare updates.

1.

Short title

This Act may be cited as the Fix And Improve Reimbursement (FAIR) for Physicians Act of 2006.

2.

Findings; purpose

(a)

Findings

Congress makes the following findings: (1)The Medicare sustainable growth rate (SGR) formula, used in establishing payment rates under the physician fee schedule under the Medicare program, resulted in significant payment cuts to physicians and health care professionals in 2002. (2)The Medicare SGR formula would have resulted in payment cuts to physicians and health care professionals in 2003, 2004, 2005, and 2006 had Congress not intervened. (3)The Medicare SGR formula will result in a 5 percent payment cut to physicians and health care professionals effective January 1, 2007. (4)According to the Medicare Payment Advisory Commission (MedPAC) and the Board of Trustees of the Federal Hospital Insurance Trust Fund and the Federal Supplementary Medical Insurance Trust Fund, the Medicare SGR formula will result in substantial payment cuts to physicians and health care professionals through at least 2015. (5)MedPAC does not support the impending payment cuts described in paragraphs (3) and (4) and is concerned that such consecutive annual payment cuts would threaten access to physician services over time, particularly primary care services. (6)MedPAC has raised concerns over current payment policies that may discourage medical students and residents from becoming primary care physicians because many Medicare beneficiaries rely on primary care providers for important health care management. (7)According to a 2006 American Medical Association survey, if payment cuts to physicians under the Medicare program go into effect, 45 percent of physicians plan to decrease the number of new Medicare patients they accept, 50 percent of physicians plan to defer the purchase of information technology, 37 percent of physicians who treat patients living in rural communities will discontinue rural outreach services, and 43 percent of physicians will decrease the number of new TRICARE patients they accept. (8)MedPAC, who considers the Medicare SGR formula a flawed, inequitable mechanism for controlling the volume of services, first recommended repeal of the Medicare SGR formula in 2001 and since then has consistently recommended repealing the formula. (9)Annual actions by Congress to override the Medicare SGR formula result in instability and unpredictability for physicians, health care professionals, seniors, and individuals with disabilities. (10)Annual actions by Congress to override the Medicare SGR formula do not solve the long-term problem as the formula extracts the added spending in future years by imposing ever more drastic cuts. (11)Stable, positive updates under the Medicare physician fee schedule that accurately reflect medical practice cost increases are vital for encouraging and economically supporting physicians’ ability to make the significant financial investment required for health information technology and participation in quality improvement programs. (12)A stable payment system for physicians is critical to preserve Medicare beneficiaries’ access to high-quality health care. (13)Adopting MedPAC's recommendation to update payments for physicians' services under the Medicare program in 2007 and 2008 by the projected change in input prices less MedPAC’s expectation for productivity growth is necessary to allow M.D.s, D.O.s, and health care professionals to continue to provide access to high-quality Medicare services for all Medicare beneficiaries while giving Congress time to develop an alternative payment system that accurately reflects the costs of providing care to Medicare beneficiaries (b)

Purpose

The purpose of this Act is to sunset the Medicare sustainable growth rate formula as of January 1, 2009, in order to expedite Congressional action in establishing a new physician payment system under the Medicare program that would appropriately reimburse physicians by keeping pace with increases in medical practice costs and providing stable, positive Medicare updates.

3.

Sunset of Medicare sustainable growth rate formula

(a)

In general

Subsection (f) of section 1848 of the Social Security Act (42 U.S.C. 1395w–4) is repealed. (b)

Effective date

The repeal made by subsection (a) shall apply to services furnished on or after January 1, 2009.

4.

Establishment of Physician Payment Update Commission

(a)

Establishment

(1)

In general

There is established a commission to be known as the Physician Payment Update Commission (referred to in this section as the Commission). (2)

Membership

(A)

Composition

The Commission shall be composed of 17 members appointed by the Comptroller General of the United States, upon the recommendation of the Majority and Minority Leaders of the Senate. (B)

Date of Appointments

Members of the Commission shall be appointed not later than 3 months after the date of enactment of this Act. (3)

Qualifications

(A)

In general

The membership of the Commission shall include individuals with national recognition for their expertise in health finance and economics, actuarial science, integrated delivery systems, allopathic and osteopathic medicine and other areas of health services, and other related fields, who provide a mix of different professionals, broad geographic representation, and a balance between urban and rural representatives. (B)

Inclusion

The members of the Commission shall include (but not be limited to) physicians and other health professionals, employers, third-party payers, individuals skilled in the conduct and interpretation of biomedical, health services, and health economics research and technology assessment. Such membership shall also include representatives of consumers and the elderly. (C)

Majority physicians and other health professionals

Individuals who are physicians or other health professionals shall constitute a majority of the membership of the Commission. (4)

Term; vacancies

(A)

Term

A member shall be appointed for the life of the Commission. (B)

Vacancies

A vacancy on the Commission— (i)shall not affect the powers of the Commission; and (ii)shall be filled in the same manner as the original appointment was made. (5)

Meetings

The Commission shall meet at the call of the Chairperson. (6)

Quorum

A majority of the members of the Commission shall constitute a quorum, but a lesser number of members may hold hearings. (7)

Chairperson

The Comptroller General shall designate a member of the Commission, at the time of the appointment of the member, as Chairperson. (b)

Duties

(1)

Study

The Commission shall conduct a study of all matters relating to payment rates under the Medicare physician fee schedule under section 1848 of the Social Security Act (42 U.S.C. 1395w–4). (2)

Recommendations

The Commission shall develop recommendations on the establishment of a new physician payment system under the Medicare program that would appropriately reimburse physicians by keeping pace with increases in medical practice costs and providing stable, positive Medicare updates. (3)

Report

Not later than December 1, 2007, the Commission shall submit to the appropriate Committees of Congress and the Medicare Payment Advisory Commission— (A)a detailed statement of the findings and conclusions of the Commission; and (B)the recommendations of the Commission for such legislation and administrative actions as the Commission considers appropriate. (c)

Powers

(1)

Hearings

The Commission may hold such hearings, meet and act at such times and places, take such testimony, and receive such evidence as the Commission considers advisable to carry out this section. (2)

Information from Federal agencies

(A)

In general

The Commission may secure directly from a Federal agency such information as the Commission considers necessary to carry out this section. (B)

Provision of information

On request of the Chairperson of the Commission, the head of the agency shall provide the information to the Commission. (3)

Postal services

The Commission may use the United States mails in the same manner and under the same conditions as other agencies of the Federal Government. (d)

Commission personnel matters

(1)

Compensation of members

(A)

In general

Members of the Commission shall serve without compensation in addition to the compensation received for the services of the member as an officer or employee of the Federal Government. (B)

Travel expenses

A member of the Commission shall be allowed travel expenses, including per diem in lieu of subsistence, at rates authorized for an employee of an agency under subchapter I of chapter 57 of title 5, United States Code, while away from the home or regular place of business of the member in the performance of the duties of the Commission. (2)

Staff and support services

(A)

Executive director

The Chairperson shall appoint an executive director of the Commission. (B)

Staff

With the approval of the Commission, the executive director may appoint such personnel as the executive director considers appropriate. (C)

Applicability of civil service laws

The staff of the Commission shall be appointed without regard to the provisions of title 5, United States Code, governing appointments in the competitive service, and shall be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title (relating to classification and General Schedule pay rates. (D)

Experts and consultants

With the approval of the Commission, the executive director may procure temporary and intermittent services under section 3109(b) of title 5, United States Code. (e)

Termination of Commission

The Commission shall terminate 30 days after the date on which the Commission submits the report of the Commission under subsection (b)(3). (f)

Review and response to recommendations by the medicare payment advisory commission

(1)

In general

Not later than January 1, 2008, the Medicare Payment Advisory Commission shall— (A)review the recommendations included in the report submitted under subsection (b)(3); and (B)submit to the appropriate Committees of Congress a report on such review. (2)

Contents of report on review of Commission recommendations

The report submitted under paragraph (1)(B) shall include the following: (A)If the Medicare Payment Advisory Commission supports such recommendations, the reasons for such support; or (B)If the Medicare Payment Advisory Commission does not support such recommendations, the recommendations of the Medicare Payment Advisory Commission, together with an explanation as to why the Medicare Payment Advisory Commission does not support the recommendations of the Commission. (g)

Authorization of appropriations

There are authorized to be appropriated such sums as may be necessary to carry out this section. Such appropriation shall be payable from the Federal Supplementary Medical Insurance Trust Fund under section 1841 of the Social Security Act (42 U.S.C. 1395t).