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Congress Has Medicare Deal

Key congressional leaders have reached a bipartisan framework for how Medicare should pay doctors and released a proposal that would erase billions in annual spending on physician services that are considered overpriced.

The proposal calls for Medicare to reduce payments on physician services that have been overvalued and sets a target that would achieve an estimated $3 billion in annual savings. Those savings would be redistributed to boost pay for other undervalued physician services.

Experts and some doctors have complained that the system that Medicare uses to set doctor pay has favored some specialists and short-changed general practitioners and others. It is also blamed for generally pushing up prices.

The reform provisions are attached to a broader bill that revises the formula for how much Medicare will spend every year on physician fees. The existing formula calls for deep cuts every year; these are overridden annually by Congress, but the new bill offers a permanent solution and would repeal that formula.

“For years, Medicare payments to doctors have been at risk of being slashed, limiting seniors’ access to high quality care,” Senate Finance Committee Chairman Max Baucus, D-Mont., said in a statement.

The values that Medicare assigns to physician services affect prices throughout the U.S. health system because private insurers usually adopt those values, too. In setting the values for most of the procedures a doctors performs, Medicare has in the past relied heavily on advice from a single committee of the American Medical Association.

the chief lobbying group for physicians.

In July, The Washington Post reported that the AMA committee’s methods for gauging the value of procedures such as colonoscopies were flawed, in part because the estimates it used for how much time a procedure requires were in some cases off by as much as 100 percent. The values of some procedures that have become far easier to perform with the advent of new technology, for example, have not been revised to capture the change.

The new proposal from Congress calls for the Government Accountability Office to study how the AMA reaches its recommendations for the value of physician services.

In a letter to legislators, the AMA’s chief executive, James Madara, said it opposed the proposal to set a specific target for a reduction in doctor fees because it “could lead to arbitrary or unwarranted selection of services” for cuts. He said the AMA valuation committee has reviewed 1,281 services in recent years, recommending cuts in 36 percent of them and increases for only 7 percent.

Amid criticism that it is too secretive, the AMA announced in October that the committee would seek to make its proceedings more open by publishing the dates and locations of meetings, vote tallies and meeting minutes.

The panel’s methods for calculating the value of physician services are also changing to ensure data consistency and integrity, the AMA said.

The framework for the new legislation was released by the leaders of the Senate Finance Committee, Baucus and Sen. Orrin Hatch, R-Utah, and the House Ways and Means Committee led by Rep. Dave Camp, R-Mich., and Rep. Sander Levin, D-Mich.

It follows similar legislation proposed over the summer.

The Senate Finance Committee is scheduled to mark up the bill Dec. 12.