Endocrine Insider
August 15, 2007

Prior to beginning its August recess, the U.S. House of Representatives approved the Children’s Health and Medicare Protection Act of 2007 (CHAMP) reauthorizing the State Children’s Health Insurance Program (S-CHIP). Also contained in the legislation is an important provision altering the physician payment formula. Currently, physician payments are calculated using a complex method called the sustainable growth rate (SGR). The SGR has been a controversial process for some time, as it uses the Gross Domestic Product in combination with other formulae to determine physician payments.

Under the CHAMP Act, physicians would see a 0.5 percent increase in payments for 2008 and 2009. In 2010, the Act requires the SGR to be replaced by dividing physician services into six different categories, each assigned to its own separate spending target. By assigning services to different spending targets, legislators believe that the problems plaguing the current formula will be eliminated.

The CHAMP Act also eliminates funding for bonus payments to physicians under the Physician Quality Reporting Initiative, a voluntary quality measure reporting program, which began July 1.

The Senate passed its own version of the children’s healthcare legislation prior to the August recess, but it did not include any provisions to alter the physician payment formula. President Bush has pledged to veto the legislation because he disagrees with the amount of funding assigned to the S-CHIP program. Once Congress reconvenes in September, House and Senate members will have to work out the differences between the two pieces of legislation, and it remains to be seen whether House provisions affecting physician payments will remain in the measure.