SGR: DATA, MEASURES, AND MODELS; BUILDING A FUTURE MEDICARE PHYSICIAN PAYMENT SYSTEM HEARING BEFORE THE SUBCOMMITTEE ON HEALTH OF THE COMMITTEE ON ENERGY AND COMMERCE HOUSE OF REPRESENTATIVES ONE HUNDRED THIRTEENTH CONGRESS FIRST SESSION FEBRUARY 14, 2013 Serial No. 113–6 ( Printed for the use of the Committee on Energy and Commerce energycommerce.house.gov U.S. GOVERNMENT PRINTING OFFICE 79–793 WASHINGTON : 2014 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001 VerDate Nov 24 2008 11:10 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 F:\MY DOCS\HEARINGS 113\113-6 CHRIS COMMITTEE ON ENERGY AND COMMERCE FRED UPTON, Michigan Chairman RALPH M. HALL, Texas HENRY A. WAXMAN, California JOE BARTON, Texas Ranking Member Chairman Emeritus JOHN D. DINGELL, Michigan ED WHITFIELD, Kentucky Chairman Emeritus JOHN SHIMKUS, Illinois EDWARD J. MARKEY, Massachusetts JOSEPH R. PITTS, Pennsylvania FRANK PALLONE, JR., New Jersey GREG WALDEN, Oregon BOBBY L. RUSH, Illinois LEE TERRY, Nebraska ANNA G. ESHOO, California MIKE ROGERS, Michigan ELIOT L. ENGEL, New York TIM MURPHY, Pennsylvania GENE GREEN, Texas MICHAEL C. BURGESS, Texas DIANA DEGETTE, Colorado MARSHA BLACKBURN, Tennessee LOIS CAPPS, California Vice Chairman MICHAEL F. DOYLE, Pennsylvania PHIL GINGREY, Georgia JANICE D. SCHAKOWSKY, Illinois STEVE SCALISE, Louisiana JIM MATHESON, Utah ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina CATHY MCMORRIS RODGERS, Washington JOHN BARROW, Georgia GREGG HARPER, Mississippi DORIS O. MATSUI, California LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin Islands BILL CASSIDY, Louisiana KATHY CASTOR, Florida BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland PETE OLSON, Texas JERRY MCNERNEY, California DAVID B. MCKINLEY, West Virginia BRUCE L. BRALEY, Iowa CORY GARDNER, Colorado PETER WELCH, Vermont MIKE POMPEO, Kansas BEN RAY LUJAN, New Mexico ADAM KINZINGER, Illinois PAUL TONKO, New York H. MORGAN GRIFFITH, Virginia GUS M. BILIRAKIS, Florida BILL JOHNSON, Missouri BILLY LONG, Missouri RENEE L. ELLMERS, North Carolina (II) VerDate Nov 24 2008 11:10 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 F:\MY DOCS\HEARINGS 113\113-6 CHRIS SUBCOMMITTEE ON HEALTH JOSEPH R. PITTS, Pennsylvania Chairman MICHAEL C. BURGESS, Texas FRANK PALLONE, JR., New Jersey Vice Chairman Ranking Member RALPH M. HALL, Texas JOHN D. DINGELL, Michigan ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York JOHN SHIMKUS, Illinois LOIS CAPPS, California MIKE ROGERS, Michigan JANICE D. SCHAKOWSKY, Illinois TIM MURPHY, Pennsylvania JIM MATHESON, Utah MARSHA BLACKBURN, Tennessee GENE GREEN, Texas PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina CATHY MCMORRIS RODGERS, Washington JOHN BARROW, Georgia LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin Islands BILL CASSIDY, Louisiana KATHY CASTOR, Florida BRETT GUTHRIE, Kentucky JOHN P. SARBANES, Maryland H. MORGAN GRIFFITH, Virginia HENRY A. WAXMAN, California (ex officio) GUS M. BILIRAKIS, Florida RENEE L. ELLMERS, North Carolina JOE BARTON, Texas FRED UPTON, Michigan (ex officio) (III) VerDate Nov 24 2008 11:10 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 F:\MY DOCS\HEARINGS 113\113-6 CHRIS VerDate Nov 24 2008 11:10 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 F:\MY DOCS\HEARINGS 113\113-6 CHRIS C O N T E N T S Page Hon. Joseph R. Pitts, a Representative in Congress from the Commonwealth of Pennsylvania, opening statement ................................................................... 1 Prepared statement .......................................................................................... 2 Hon. Frank Pallone, Jr., a Representative in Congress from the State of New Jersey, opening statement .......................................................................... 3 Hon. Fred Upton, a Representative in Congress from the State of Michigan, opening statement ................................................................................................ 4 Prepared statement .......................................................................................... 5 Hon. Michael C. Burgess, a Representative in Congress from the State of Texas, opening statement .................................................................................... 6 Hon. Henry A. Waxman, a Representative in Congress from the State of California, opening statement ............................................................................. 7 Prepared statement .......................................................................................... 8 WITNESSES Glenn M. Hackbarth, J.D., Chairman, Medicare Payment Advisory Commis- sion ........................................................................................................................ 9 Prepared statement .......................................................................................... 11 Answers to submitted questions ...................................................................... 182 Harold D. Miller, Executive Director, Center for Healthcare Quality and Payment Reform ................................................................................................... 71 Prepared statement .......................................................................................... 74 Answers to submitted questions ...................................................................... 188 Elizabeth Mitchell, CEO, Maine Health Management Coalition ........................ 100 Prepared statement .......................................................................................... 102 Robert Berenson, M.D., Institute Fellow, Urban Institute .................................. 124 Prepared statement .......................................................................................... 126 Answers to submitted questions ...................................................................... 194 Cheryl L. Damberg, Ph.D., Senior Policy Researcher, Professor, Pardee Rand Graduate School ................................................................................................... 139 Prepared statement .......................................................................................... 141 SUBMITTED MATERIAL Letter of February 13, 2013, from the National Partnership for Women & Families to the Subcommittee, submitted by Mr. Pallone ................................ 176 Statement of the American Medical Association, submitted by Mr. Pitts .......... 178 Statement of the American College of Physicians, submitted by Mr. Pitts ........ 181 (V) VerDate Nov 24 2008 11:10 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 F:\MY DOCS\HEARINGS 113\113-6 CHRIS VerDate Nov 24 2008 11:10 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 F:\MY DOCS\HEARINGS 113\113-6 CHRIS SGR: DATA, MEASURES AND MODELS; BUILD- ING A FUTURE MEDICARE PHYSICIAN PAY- MENT SYSTEM THURSDAY, FEBRUARY 14, 2013 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HEALTH, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. The subcommittee met, pursuant to call, at 10:18 a.m., in Room 2123 of the Rayburn House Office Building, Hon. Joe Pitts (chair- man of the subcommittee) presiding. Members present: Representatives Pitts, Burgess, Hall, Shimkus, Murphy, Gingrey, Lance, Cassidy, Guthrie, Griffith, Bilirakis, Ellmers, Upton (ex officio), Pallone, Dingell, Engel, Capps, Green, Barrow, Christensen, Castor, Sarbanes, and Waxman (ex officio). Staff present: Clay Alspach, Chief Counsel, Health; Matt Bravo, Professional Staff Member; Steve Ferrara, Health Fellow; Julie Goon, Health Policy Advisor; Debbee Hancock, Press Secretary; Robert Horne, Professional Staff Member, Health; Carly McWilliams, Legislative Clerk; John O’Shea, Senior Policy Advisor, Health; Andrew Powaleny, Deputy Press Secretary; Chris Sarley, Policy Coordinator, Environment and Economy; Heidi Stirrup, Health Policy Coordinator; Alli Corr, Democratic Policy Analyst; Amy Hall, Democratic Senior Professional Staff Member; Elizabeth Letter, Democratic Assistant Press Secretary; and Karen Nelson, Democratic Deputy Committee Staff Director for Health. OPENING STATEMENT OF HON. JOSEPH R. PITTS, A REP- RESENTATIVE IN CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA Mr. PITTS. The subcommittee will come to order. The chair recog- nizes himself for 5 minutes for an opening statement. The background and details of the topic of today’s hearing are well known to physicians, to this subcommittee, and to most health policy analysts. The Sustainable Growth Rate, or SGR payment system, originated with the Balanced Budget Act of 1997. At that time, the intent of the of SGR physician payment system, placing controls on Medicare spending through global spending targets and fee cuts if the targets were exceeded, seemed like a reasonable thing to do. However, within a short time, it became apparent that this policy was flawed. This subcommittee has had previous hearings that have ad- dressed the shortcomings of SGR, including the repeated threats to (1) VerDate Nov 24 2008 11:10 Feb 25, 2014 Jkt 037690 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 F:\MY DOCS\HEARINGS 113\113-6 CHRIS 2 patient access to care, and provider income, and the mounting costs of Congressional actions to override the scheduled fee cuts. Con- gress has acted to override these statutory cuts on at least 15 occa- sions, and the cost