House leaders seek funding for physician payment changes

     Two key leaders in the House of Representatives recently addressed a letter to HHS Secretary Tommy Thompson to gather specific information before crafting legislation that would change the formula that sets doctors' annual Medicare payment rates. Ways &  Means Chairman, Bill Thomas (R-Calif.) and Health Subcommittee Chairman, Nancy Johnson (R-Conn.) are demanding specifics from Sec. Thompson after Thompson's testimony before the House Ways & Means committee Feb. 6.  Thompson  indicated that any upcoming changes to the physician fee schedule payment formula should be "budget neutral," meaning, the costs of boosting doctors'  pay would have to be offset by cost-cutting in other areas of the Medicare program.

     Representatives Thomas and Johnson are asking Sec. Thompson to clarify two main points;  which "provider problems" (including changes to the conversion factor formula used to update physician fees) merit congressional action; and a specific list of savings recommendations that could provide the funding for these needed fixes.  The letter also identifies a number of recent recommendations made by the Medicare Payment Advisory Commission (MedPAC) that, if implemented would cost about $174 billion over ten years. Using MedPAC's recommended reforms to the conversion factor formula would cost $128 billion over that period.

     The letter further states, "Clearly, we are not suggesting that we could afford, or that we should implement, every MedPAC recommendation.  However, MedPAC has identified serious problems, such as significant and successive payment cuts to physicians, which are unsustainable and require reform."