Medicare Physician Payment Reform Act Of 2009

Floor Speech

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Mr. SPRATT. Mr. Speaker, I was here at the creation of the sustainable growth rate formula. It was part of the balanced budget agreement of 1997. I am here today to say that the SGR has not worked.

Here is the problem MedPAC presented to us in 1997:

In year 2, when we sought to curb or cut Medicare rates, volume increases in year 2 tended to make up the difference due to reduced rates.

In year 3, therefore, an automatic adjustment factor or formula was needed to target and recoup excess payments. Sound complicated? Well, that is a simple version. Suffice it to say, the SGR has proven to be so complex, so blunt an instrument, and so draconian that it has barely been used.

For example, in 2008, we reversed a 10.6 percent decrease in physicians' rates and replaced it with a 1.1 percent increase. In 2010, the SGR dictates a 21 percent cut in physicians' payment rates. You and I know that is not going to happen.

By assuming that the SGR will be applied, when we know it has not been applied, and is unlikely to be followed in the future, Medicare spending is substantially understated. CBO says that the rewrite of SGR now before us will result in a net spending increase of $210 billion over 10 years. The CBO has to assume that the SGR will be strictly applied in each of those 10 years. CBO is bound by its rule of projecting the budget; we are not. We know that the SGR is unlikely to be applied, and so the right step, straightforward step, is to pass this bill and change the SGR, not by wiping it out, but by replacing it with an updated formula that is realistic and likely to be used.

The bill before us reflects two agreements that are in the budget resolution for this year. One is to strengthen fiscal responsibility by enacting a statutory pay-as-you-go rule. The other is to institute realistic budgeting by changing this flawed formula called the sustainable growth rate factor.

The budget resolution allows the budget effects of changing the SGR to be calculated against a realistic baseline, one that reflects current policy. This means the baseline assuming the payment rates in effect for physicians in 2009 will stay in effect through 2019.

The SPEAKER pro tempore. The time of the gentleman has expired.

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Mr. SPRATT. This baseline assumption represents a realistic benchmark against which to measure the fiscal effects of legislation reforming Medicare's physician payment system. Without a realistic baseline, we will revisit this issue every year, as we have in the past, by passing short-term fixes that do nothing to address the long-term problems. Without the reforms in this legislation, the budget will continue to understate the real cost to the Treasury of Medicare payments.

So now is the time to adjust the SGR. The bill before us is a constructive solution. After 6 years of short-term fixes that did little to address the underlying causes of excess cost growth, we now have the opportunity to vote for a substantive bill. This bill does not allow for uncontrolled spending growth. It provides realistic spending targets that are fair, frugal, and holds physicians accountable.

This bill does address two of the most important challenges in health care: better support for primary care and better coordination of care. It does so by, among other things, providing an extra growth allowance for primary care services. The bill also provides incentives for the creation of accountable care organizations which encourage providers to improve quality and control costs by coordination among all providers serving a patient. This is the type of structural reform we need.

This is a good bill. I urge its support.

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