SGR Temporary Fix to March 2015 Likely to Sail Through Congress, Includes ICD-10 Delay to October 1, 2015

In early March, we wrote that a bipartisan group of congressional lawmakers announced they had reached a deal on legislation to repeal Medicare’s widely criticized sustainable growth rate (SGR) formula, replacing volume-based payments with measures that reward care efficiency and quality. However, it was noted that the legislation faced steep political challenges in Congress.

Updating this story, it has been reported that the House of Representatives has reached a deal to delay physician Medicare reimbursement cuts under the sustainable growth rate (SGR) formula for another year.

According to the 121-page bill, the House will pass a year-long extension, through the end of March 2015. The bill also extends several related healthcare measures until the end of March 2015.

The year-long patch is not paid for over the long term. Instead, the bill shifts around Medicare sequester cuts due to take place in 2024, so that all of them happen in fiscal year 2024, instead of having them split between fiscal years 2024 and 2025. But that language only helps pay for the doc fix over a 10-year window, and creates no actual budget savings over a longer term. As a result, the bill also includes language exempting it from “PAYGO” rules that require new spending to be offset with new revenues or cuts.

“This is a one-year patch for the SGR, something that was worked out between Speaker (John) Boehner and Sen. Majority Leader (Harry) Reid,” said Stanley Nachimson, principal of Nachimson Advisors, a healthcare information technology consultancy specializing in ICD coding. “We should know by this weekend if it happens.”

Both leaders have pledged to allow an up or down vote, Nachimson said, with the House going first on Thursday and the Senate Friday. “This thing, I think, came up rather quickly. It caught a few people by surprise, including me.”

Ultimately, the last-minute agreement will likely disappoint physicians, most of whom support a previous bipartisan deal to permanently repeal the much hated payment formula. But that deal hit a snag this month when lawmakers inserted measures in the bill tying it to a delay in the Affordable Care Act’s mandate requiring all individuals to obtain health insurance. 

The cost to permanently repeal the SGR with the ACA delay will total more than $180 billion, according to a report from the Congressional Budget Office.

Additionally, the bill also contains language that would delay ICD-10 implementation until 2015, according to a statement from the American Health Information Management Association. Specifically, Section 212 of the proposed bill states that “The Secretary of Health and Human Services may not, prior to October 1, 2015, adopt ICD–10 code sets as the standard for code sets under section 1173(c) of the Social Security Act (42 U.S.C. 1320d–2(c)) and section 162.1002 of title 45, Code of Federal Regulations.”

In response to this legislation, Ardis Dee Hoven, M.D., President of the American Medical Association, issued the following statement opposing the bill:

“Facing another self-imposed deadline, the House of Representatives is scheduled to vote Thursday on the “Protecting Access to Medicare Act,” which would enact the 17th temporary “patch” to avert a 24 percent payment cut. Today, the American Medical Association and other physician groups are calling on House members to vote no on this legislation. Full repeal of the sustainable growth rate formula is the answer to strengthening the Medicare program, not another patch.

“The case for repeal of the so-called SGR is stronger than ever. The bipartisan, bicameral agreement by the three congressional committees of jurisdiction for the Medicare program would improve quality, increase care coordination and lower total costs and is strongly supported by the AMA and over 600 other physician organizations.

Unfortunately, differences on budgetary issues have thus far stymied final passage.

By extending the Medicare provider sequester and “cherry picking” a number of cost savings provisions included in the bipartisan, bicameral framework, the “Protecting Access to Medicare Act” actually undermines future passage of the permanent repeal framework. Further, it would perpetuate the program instability that now impedes the development and adoption of health care delivery and payment innovation that can improve health care and strengthen the Medicare program. 

We urge the House and the Senate to continue to pursue bipartisan negotiations on permanent SGR repeal legislation and for both chambers to oppose The Protecting Access to Medicare Act.”

Additionally, Senate Finance Committee Chairman Ron Wyden, D-Ore., issued the following statement:

“We have a choice. We can either continue on with the status quo in Medicare by enacting a 17th patch – reinforcing a flawed payment formula that jeopardizes seniors’ access to their doctors, pits provider groups against each other, and fails to actually improve the Medicare program.

Or, we can end the budget fiction that is the SGR, provide certainty to seniors and their doctors, and get the ball moving on bipartisan Medicare reforms – paying for value, managing chronic illness, increasing data transparency, and finally moving away from fee-for-service payment that got us into this mess.

My choice is to end the status quo in Medicare by permanently repealing and replacing the SGR. There is no reason to wait.”

We will report more information as it becomes available.

Update:

March 27, 2014, 12:33pm: The House passed a one-year “doc fix” patch by voice vote, approximately two hours after the vote was temporarily pulled from the floor.

The bill would avoid a cut in Medicare reimbursement rates until March 2015.  Bipartisan legislators in the House were uncertain that the bill would get the two-thirds majority required to pass under a suspension of the rules, but the measure was quickly moved through the floor on a voice vote despite concerns that a recorded vote may not have yielded a favorable result. 

Passage of the bill comes on the heels of opposition from Senate Finance Chairman Ron Wyden (D-OR) and a myriad of physician groups, who have pushed for a more permanent fix to Medicare’s sustainable growth rate (SGR).