Executive Session

Floor Speech

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Mr. GRASSLEY. Mr. President, reforming the Medicare physician payment system is one of the most difficult issues we face in Medicare today. The name of the formula is the sustainable growth rate. Generally around here we refer to that as the SGR. It is the formula for the reimbursement of doctors under Medicare. It was designed in the first instance to control physician spending and to determine annual physician payment updates by means of a targeted growth rate system. The SGR is not the only problem with the Medicare physician payment system. Everyone who knows anything about physician payments and Medicare knows that this SGR formula is not working. It is a fee-for-service system that rewards volume instead of quality or value. This means that Medicare simply pays more and more as more and more procedures and tests and services are provided to patients. Providers who offer higher quality care at a lower cost get paid less. Somehow, it is a backward system, a perverse system. It is one of the driving forces behind rising costs and overutilization of health care, particularly in some parts of the United States.

In addition, the sustainable growth rate formula itself is flawed. The SGR is designed to determine annual physician payment updates by comparing actual expenditures to expenditure targets.

The purpose of the SGR was to put a brake on runaway Medicare spending. The SGR was intended to reduce physician payment updates when spending exceeded growth targets. In recent years, Medicare physician spending has exceeded those SGR spending targets. That has resulted, naturally, in physician payments being cut. As the magnitude of these payment cuts has increased over time, Congress has stepped in to avert these scheduled cuts in reimbursement to doctors.

In a roundabout way, the SGR has been serving its purpose. Numerous improvements in Medicare payments in other areas have been implemented over the years to offset or to pay for the various so-called doc fixes we have had to do and generally do them on an annual basis. Presently they are done on an 18-month basis, expiring December 31 this year.

We should, in fact, be reforming physician payments. That is why I supported the SGR amendments offered by my colleague, the Senator from Texas, during the Senate Finance Committee markup that concluded 8 days ago. Those amendments would have provided a fully offset, positive physician update for the next 2 years. And if we erroneously take up a debate on this flawed Stabenow bill, I will have an alternative to offer with my good friend, the chairman of the Senate Budget Committee, Senator Conrad. A Conrad-Grassley amendment would be a bipartisan approach to this.

Realigning incentives in the Medicare Program and paying for quality rather than quantity of services is, of course, an essential part of physician payment reform. But as fundamentally flawed as the physician payment system is, S. 1776, the bill before us, is just as fundamentally flawed. S. 1776 would add--can my colleagues believe this--a $ 1/4 trillion cost to the national debt. A quarter of a trillion, obviously, is $250 billion. But worse yet, it does not fix the problems we have with the physician payment system. It simply gives a permanent freeze to those payments. The American Association of Neurological Surgeons and the Congress of Neurological Surgeons oppose the Stabenow bill for precisely that reason, and I applaud them for having the courage to say so.

My esteemed colleague, the majority leader, claims this bill has nothing to do with health reform. I think it has everything to do with health reform. He says the $247 billion cost of this bill is just correcting, in his words, ``payment discrepancy;'' merely, in his words, ``a budgetary problem,'' a problem that needs to be fixed. But I don't believe anybody is going to buy that argument, not even the Washington Post. I have here a recent editorial. They said:

$247 billion ..... is one whopper of a discrepancy.

S. 1776 isn't being offered to fix a budget payment discrepancy, it is being offered as one whopper of a backroom deal to enlist the support of the American Medical Association for a massive health reform bill that is being written behind closed doors.

Nobody is being fooled about what is going on in this body, the most deliberative body in the world, the Senate.

When President Obama spoke to a joint session of Congress last month--the week after we came back from our summer break--he made a commitment to not add one dime to the deficit now or in the future. Those are his words, not mine. But as this Washington Post editorial notes, S. 1776 would add 2.47 trillion dimes to the deficit.

We go to chart 2 now. That would be 2.47 trillion dimes, enough to fill the Capitol Rotunda 23 times.

Now we have chart 3. I wholeheartedly agree with the editorial's conclusion. The Post editorial said:

A president who says that he is serious about dealing with the dire fiscal picture cannot credibly begin by charging this one to the national credit card .....

This quote is highlighted out of that same editorial.

The Office of Management and Budget and the Treasury Department announced that the fiscal year 2009 deficit hit a record of $1.4 trillion. According to the Government Accountability Office, public debt is projected by the year 2019 to surpass the record that was set in 1946, 1 year after the end of World War II. That debt was attributable to the war, which was the war to save the world for democracies because of the dictatorial governments of Italy, Germany, and Japan, as we recall from history.

There is no doubt that fixing the flawed physician payment system is something that must be addressed. But the problem--this problem--with the physician payments is one of the biggest problems in health care that needs fixing. But at a time when the budget deficit has reached an alltime high of $1.4 trillion, this situation demands fiscal discipline.

As the Washington Post has correctly pointed out, S. 1776 is, indeed, a test of the President's pledge to pay for health care reform.

Repealing the SGR without any offsets, as S. 1776 would do, is a flagrant attempt to try and hide the true cost of comprehensive health care reform.

Let me suggest to the American people that bill, comprehensive health care reform--at least the one that came out of the Senate Finance Committee--is thick, at 1,502 pages that we all are committed to reading before it goes to the floor. That bill, of course, will not go to the floor because now it is being merged in secrecy with the Senate HELP Committee bill, and so it may come out thicker. Who knows. We are talking about a great deal of cost connected with that and the SGR fix being connected with that as well.

We have in the Senate Finance Committee bill, that was reported out, significant payment system reform. That bill takes savings of almost $ 1/2 trillion to fund a new entitlement program outside Medicare. The priority for Medicare savings should be fixing Medicare problems, and the physician payment issue and the SGR is the biggest payment system problem in Medicare today. It should get fixed in health care reform with those Medicare savings.

I must, therefore, object not to fixing the SGR and improving the system for physician payments--which clearly must be done--but to this very flawed bill. It is only a permanent payment freeze. It does not fix the problem. It is not paid for. It should be a part of health care reform. It adds $ 1/4 trillion to the deficit. It is one whopper of a discrepancy. It is not credible.

I urge my colleagues to oppose cloture on this train wreck of a bill.

I yield the floor and, since I do not see any of my colleagues waiting to speak, I suggest the absence of a quorum.

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