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The U.S. House of Representatives have passed H.R. 3961--the Medicare Physician Payment Reform Act of 2009. H.R. 3961 repeals the current Medicare physician payment formula--the sustainable growth rate (SGR)-- and replaces it with a new framework. The vote was 243-183. The majority were Democrats although Michael Burgess, MD, (R-TX), was the sole Republican to vote for passage.

Under H.R. 3961, the SGR would be replaced with a new formula in which only physician services, and not other services provided incidentally to a physician visit (such as laboratory services or drugs), would be counted in each category; the update for 2010 would be the percentage increase in the Medicare economic index (MEI), which is 1.2 percent; and the new SGR formula would take into account spending for each category of service since 2009 or, beginning in 2014, for the previous five years.

Beginning in 2011, there would be separate target growth rates and conversion factor updates for two categories of service: evaluation, management, and preventive services (services to grow at GDP plus 2% per year), and all other services (to grow at the rate of GDP plus 1% per year). In addition, the legislation allows Accountable Care Organizations (groups of physicians and possibly hospitals responsible for quality and overall annual Medicare spending for their patients) to have their own expenditure targets and updates for such practitioners, aside from reductions or increases applying elsewhere.

House Speaker Nancy Pelosi (D-CA) issued the following statement on the passage of the legislation: "Strengthening Medicare for generations to come is essential to our efforts to reforming health care for all Americans. This legislation will permanently improve the way Medicare pays physicians and in doing so, guarantee that America's seniors will continue to have access to excellent care through Medicare.

Association Support

"This legislation is a top priority for seniors and was endorsed by the AARP and the American Medical Association because it protects seniors' access to their doctor, promotes primary care, and offers incentives for doctors to provide patients with higher quality and more efficient care. Today's vote by the House keeps our promise to strengthen Medicare, never weaken it."

J. James Rohack, M.D. President of the American Medical Association released a statement on the passage, saying: "The U.S. House of Representatives passed legislation today that permanently repeals the broken Medicare physician payment formula that hurts access to care for seniors, baby boomers and military families. This vote is an important step toward ensuring a more stable and secure Medicare system for the patients it serves. The American Medical Association thanks the members of Congress who put patients above politics and voted yes on H.R. 3961, the "Medicare Physician Payment Reform Act of 2009."

"Support of the bill by AMA, AARP and the Military Officers Association of America helped drive home the real-life impact cuts would have on access to care for seniors, baby boomers and military families. Without action by both houses of Congress, Medicare will cut payments to physicians by 21 percent in 2010, with more in years to come. Today's House vote is the first step toward preventing this cut and eliminating the formula that creates a roller coaster of uncertainty for seniors and the physicians who care for them. Promises have been made to seniors and military families - and the House recognizes that those promises must be kept.

"Seniors who rely on Medicare now and the baby boomers who reach age 65 in less than two years expect access to care and choice of physician. The House recognizes that the best way to achieve access and choice for patients is to repeal the broken physician payment formula. The House also acted on behalf of military families whose health care is at risk, as TRICARE ties its payment rates to Medicare.

"The AMA urges the Senate to act quickly before the cut begins on January 1. Fixing the Medicare physician payment formula once and for all is an essential element of comprehensive health reform.Congress needs to fulfill its current commitments as it considers expanding its obligations. Physicians must be assured of stable payments so they can continue to care for seniors, baby boomers and military families."

William F. Jessee, MD, FACMPE, President and CEO of the Medical Group Management Association had similar praise: "On behalf of physicians and patients, the Medical Group Management Association (MGMA) congratulates the House of Representatives on its historic action to repeal the flawed Medicare sustainable growth rate (SGR) formula. This vote is the first step toward creating a more stable and predictable reimbursement system benefiting both Medicare physician providers and beneficiaries. MGMA joined 127 medical organizations in a letter to all House members urging a 'yes' vote on the legislation, H.R. 3961. Now that the House has passed this legislation, strongly supported by the President, it is time for the Senate to follow suit. I will be urging all MGMA members to immediately contact their Senators to support inclusion of the SGR repeal in the Senate's health care reform bill.

Medical practices are small businesses that operate on extremely thin financial margins. It is imperative that Congress permanently repeal the SGR. As long as the SGR remains, reimbursement uncertainty prevents physician practices from properly and adequately preparing for an ever-increasing number of Medicare beneficiaries."

The text of the bill: http://docs.house.gov/rules/health/111_sgr1.pdf

Rep. Pelosi's remarks: http://www.speaker.gov/newsroom/pressreleases?id=1452