Statement by Senator Tom Coburn, M.D.

Medicare Physician Value-Based Purchasing Program

November 3, 2005

MR. COBURN. Mr. President, I thank the leadership for giving me an opportunity to express some concerns with the version of “value-based purchasing” for physicians in the Medicare program, as presented in the Senate reconciliation legislation. While I commend the committee’s efforts in finding budget off-sets to stop the Medicare payment cuts facing physicians next year I believe the committee, and Congress as a whole, has accepted the idea of “value-based purchasing” with little discussion, vetting and evidence that it will actually do what people say it will do.

We have a big problem in the Medicare system. Our physicians, the bread and butter of the Medicare program who provide millions of services each year to Medicare beneficiaries, are facing unprecedented cuts in their reimbursement at a time when their own costs are skyrocketing. We have known about this problem for years, have taken action to prevent previously scheduled cuts and once again we must take action this year to prevent more cuts. I commend the Senate Finance Committee’s efforts for at least preventing these cuts for a year and recommending that physicians receive a modest one percent increase instead of a 4.4 percent cut. I know the physician community is grateful for this effort in a time of budget deficits, hurricanes and other problems.

I am concerned about another provision included in the bill – specifically, value-based purchasing, a.k.a. “pay-for-performance.” My concern is that this concept is not ready to be codified and be taken to prime-time. In the last decade, we have already declared two Medicare physician payment systems – the current sustainable growth rate formula and the volume performance standard – dysfunctional and unworkable. I do not see the value of diving so quickly into adding a new, untested and unproven system on top of an already declared disaster – the sustainable growth rate or “SGR.”

As a physician, I can attest that most doctors are dedicated to improving the quality of care they provide their patients. The concept of continuing medical education and continuous quality improvement is engrained in our medical culture. For years, physicians have been involved in peer review, the development of clinical guidelines and best practices, and outcome measurement. The concept of value-based purchasing is to turn these practices into a payment system that pays higher performers more and pays less to those who cannot make the grade. In theory, this has great promise and I believe it will improve the quality of care provided to all Medicare beneficiaries while increasing efficiency in the system.

However, I am concerned that the language included in S. 1932, the “Deficit Reduction Omnibus Reconciliation Act of 2005” will not achieve these goals. While is does give physicians a 1 percent update for 2006, it does not address the impending cuts scheduled for January 1, 2007. The proposed legislation does not fix the SGR, it instead places cuts on top of cuts, and infuses a system that mandates greater volume on top of one that penalizes physicians for volume increases. Value-based purchasing and the SGR are not compatible and cannot work together. In exchange for a one percent increase in 2006, physicians could receive cuts of up to 7.5 percent in 2007, 2008, 2009, 2010 and 2011. If you think your physician constituents are frustrated now, wait until they understand this.

Under the suggested program, some physicians may have the opportunity to earn back that additional two percent cut if they meet specific “quality” and/or “efficiency” measures. Many of these measures have not yet been developed, have not yet been vetted by consensus building groups like the National Quality Forum and may or may not be evidenced-based. Before there is value-based purchasing, there must be agreed upon, comprehensive quality and efficiency measures for each medical specialty developed by the specialties themselves. In this proposed legislation, bureaucrats in Baltimore would primarily develop the measures that physicians across the country—with limited input from the physician and specialist community. I can tell you as a doctor that I am not interested in having some bureaucrat in Baltimore tell me how to deliver a baby in Muskogee, OK, and my patients are not either. Physicians must be the ones to develop these measures if they are going to be held accountable and if it is really going to improve quality and not just be another layer of paperwork and bureaucratic administration.

I believe pay-for-performance it critical to improving quality in our healthcare system. But, we must get it right. Our physicians are facing year after year of cuts and beneficiaries are facing a loss of access to the physicians they know and trust. I believe the correct course is to deliberately and methodically build up toward a new physician payment system that accurately accounts for the cost in providing care to beneficiaries while encouraging and rewarding high quality and improvement.