The Congressional Budget Office recently scored different Senate and House committee-approved versions of physician payment reform bills, and found the Senate Finance panel’s version costs more. But a direct comparison of payments that would be made to physicians in the two bills puts the Senate version in a better fiscal light.

The Senate bill would cost $150.4 billion over 10 years, while enacting the House Ways and Means panel’s version would cost $121 billion during the same period, according to the CBO’s Jan. 24 report.

Both bills seek to repeal and replace the unpopular Medicare SGR formula for paying physicians with value-based payment systems or other alternative payments models. (See Also see "Draft SGR Repeal Bill Reworks Doc Incentives, Includes Imaging/ECG Appropriateness Criteria" - Medtech Insight, 31 October, 2013..)

But the Senate bill includes $111.5 billion in payments to physicians, which is less than in the House bill, according to the CBO’s Jan. 24 estimate, which may make it the more attractive choice. The Senate bill freezes base physician payments for 10 years, while the House version would give doctors a 0.5 percent base annual update, CBO affirms in a separate analysis. In both bills, doctors can earn value-based incentive payments on top of the base payments.

The reason for the overall cost surplus in the Senate is that package includes Medicare and Medicaid extenders, while the House bill does not.

Extenders are items such as therapy services, ambulance services and geographic practice cost indexes for Medicare, as well as the qualifying individual program, transitional medical assistance and a special diabetes program under Medicaid. The extenders proposed in the Senate bill would add up to approximately $34 billion over 10 years, CBO calculates, roughly accounting for the difference between the House and Senate versions of the bill.

The extenders were attached to the three-month SGR patch included in the budget agreement enacted at the end of 2013, indicating that are likely to be included in a final SGR reform bill, making the Senate CBO estimate more realistic. (See [A#29140109003].)

The Senate version also includes a provision requiring a remote telemonitoring pilot study of homebound patients that would cost $1 billion over 2014-2023.

Also included in CBO estimates for both bills is the likelihood that the increased Medicare spending that would result from the reform legislation would trigger, beginning in 2015, the automatic cost-reduction process that is supposed to be overseen by the Independent Payment Advisory Board, as stipulated by the Affordable Care Act. (See Also see "IPAB’s Tough Road: Republicans Opt Not To Help Find Members" - Medtech Insight, 20 May, 2013..) The impact of that process would lead to $0.6 million in Medicare spending reductions under the Senate SGR bill and $0.5 billion in reductions under the House bill from 2015 to 2023.

Also riding along with both of the SGR repeal bills are provisions to set appropriate-use criteria for advanced diagnostic imaging services in physicians’ offices, hospital outpatient departments and ambulatory surgical centers.

Still To Come: Pay-for Provisions

A major gap in both bills is they have yet to include pay-for provisions to cover the costs estimated by CBO. A laundry list of potential policies to help defer the costs is circulating on Capitol Hill. Reforms to the clinical laboratory and durable medical equipment payment systems could be in the crosshairs, as are proposals to exclude certain services, such as advanced imaging, from being performed as self-referrals. (See [A#01131223009].)

Without a permanent fix to the SGR formula, pay to physicians treating Medicare patients would be reduced by 24.4 percent after March 31 under the calculation, which automatically cuts payments if prior-year spending goes above a threshold. Congress has been enacting temporary patches to the SGR perennially to keep physicians’ pay from dropping dramatically.

On Jan. 30, Sen. Max Baucus, D-Mont., chairman of the Finance Committee, projected that there would be a final agreement on the SGR reform bills by Feb. 1, so that each could be brought to their respective chambers for a final vote.

House Physician Pay Bill Cheaper Than Senate Version, But Lacks Extenders

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