By Bruce Japsen, Forbes, Contributor
MARCH 26, 2015 – The Republican-led U.S. House of Representatives has joined the Obama administration and private insurance companies in the march away from fee-for-service medicine in passing a repeal to Medicare’s controversial sustainable growth rate formula.
The legislation, which overwhelmingly passed by a 392-37 bipartisan vote in the U.S. House, will avert a 21 percent cut in Medicare payments to doctors while at the same time moving future reimbursement to pay-for-performance and away from traditional fee-for-service medicine.
Congress has several times for more than a decade now merely made stopgap corrections to avert drastic payment cuts to Medicare payments under SGR, which was created by the Balanced Budget Act of 1997 in an effort to slow the growth of Medicare spending.
This time, the legislation, which is supported by the White House, will increase payments 0.5 percent annually through 2019. But it would tie more Medicare payments to quality measures that include clinical care, patient safety and care coordination.
“The bill brings about a fundamental change in how Medicare reimburses physicians – moving from a volume-based payment system to value-based where physicians receive payment based on quality, coordination and outcomes,” Mary Grealy, president of the Healthcare Leadership Council, a coalition of chief executive officers from companies like Aetna AET -1.14% (AET), Johnson & Johnson JNJ -0.22% (JNJ), Merck (MRK) and Walgreens Boots Alliance (WBA) said in a statement to Forbes.
Health insurance companies led by UnitedHealth Group UNH -0.12% (UNH), Anthem (ANTM), Aetna (AET) and others are shifting billions of dollars in payments to providers away from fee-for-service medicine to value-based care as well. Critics of the fee-for-service approach say it leads to unnecessary medical tests and procedures and results in payments to doctors and hospitals no matter how the care turns out.
Wondering how the Affordable Care Act moves doctors further away from fee-for-service medicine? The Forbes eBook Inside Obamacare: The Fix For America’s Ailing Health Care System answers that question and more. Available now at Amazon and Apple.