This time last year, we analyzed 2014’s sustainable growth rate (SGR) fix. Although a bipartisan group of lawmakers announced they had reached a deal on legislation to repeal the SGR, it ultimately gave way to a temporary solution. One year later we find ourselves with that temporary solution in need of yet another, hopefully permanent, fix.
An SGR agreement negotiated by Speaker of the House, John Boehner and the House Democratic leader, Nancy Pelosi, would repeal the Medicare formula that threatens to cut doctors’ fees each year. In its place, Congress would establish an “incentive payment system” to reward doctors who receive high performance scores from the government. Scores would be based on factors like the ability to keep patients healthy while controlling costs, notes the New York Times.
The bill, H.R. 1470 (found here) and S. 810, is an updated version of the policies set forth in last year’s bipartisan, bicameral Medicare payment reform bill. The House is expected to vote on the entire proposal before the March 31 expiration date of the current patch.
Just yesterday, the House Energy and Commerce and House Ways and Means Committees introduced H.R. 2, the Medicare Access and CHIP Reauthorization Act, to permanently replace Medicare’s SGR. The agreement builds upon H.R. 1470. Notably, the top Republicans and Democrats from the key committees of jurisdiction are all cited as co-sponsors, indicating strong bipartisan support.
Read the complete bill online here.
Read a section by section outline here.
Overview
Currently, the annual Medicare update for physician services would result in a 21.2% cut on April 1, 2015. Future cuts could exceed 25%.
As explained by the American Society of Anesthesiologists, the authors of this new legislation claim it would replace the current system with “an improved payment system that rewards quality, efficiency, and innovation.” In this SGR replacement, physicians would receive a 0.5 percent update for the initial five years of the law while a new system, known as the Merit-Based Incentive Payment System or MIPS, is implemented. The MIPS program goes into effect in 2019.
The MIPS incentive payment program “consolidates the three existing incentive programs, continuing the focus on quality, resource use, and meaningful electronic health record (EHR) use with which professionals are familiar, but in a cohesive program that avoids redundancies.” Specifically, the MIPS streamlines and improves on:
- The Physician Quality Reporting System (PQRS) that incentivizes professionals to report on quality of care measures;
- The Value-Based Modifier (VBM) that adjusts payment based on quality and resource use in a budget-neutral manner; and
- Meaningful use of EHRs (EHR MU) that entails meeting certain requirements in the use of certified EHR systems.
Further, the new bill provides financial incentives for professionals to participate in tests of alternative payment models (APMs).
For a detailed look at the SGR Repeal language, here is a section by section outline by the House Energy and Commerce Committee.
Political Hurdles
Several Senate Democrats have raised objections to the draft bill, citing three major areas of concern. First, that the package will extend the Children’s Health Insurance Program (CHIP) for only two-years, rather than the four-year extension that every Democrat in the Senate has cosponsored. Second, that beneficiary-oriented reforms—such as increased means testing of Part B and D premiums, or limits on first-dollar coverage in Medigap—have come under scrutiny from advocacy groups such as AARP. Third, an abortion policy rider, the Hyde amendment, would bar federal funds from abortions at community health centers.
Read a comprehensive analysis of the “top five questions” about the SGR deal by Shea McCarthy of Thorn Run Partners.
House Statement
“We can see the light at the end of the SGR tunnel – finally. Our bipartisan product begins the task of strengthening Medicare over the long term,” said Energy and Commerce Committee Chairman Fred Upton (R–MI). “This responsible legislative package reflects years of bipartisan work, is a good deal for seniors, and a good deal for children too. It’s time to put a stop once and for all to the repeated SGR crises and start to put Medicare on a stronger path forward for our seniors.”
“Finally, after a decade of trying, we have a bipartisan bill that will permanently repeal the flawed SGR and move Medicare to a health care system based on quality and efficiency, that is good for seniors and doctors alike.” said Energy and Commerce Committee Ranking Member Frank Pallone (D-NJ). “As with any bipartisan effort, this legislation reflects give and take on both sides. However, we have come to a balanced compromise that will end uncertainty in the system, extend the Children’s Health Insurance Program (CHIP), fund Community Health Centers, and make permanent the Qualifying Individual (QI) program that helps low income seniors pay their Medicare premiums.”
Conclusion
Legislation to permanently repeal the Medicare SGR is an exciting breaking story. We will continue to follow the legislative and political developments as this issue dominates Washington in the coming days. There is currently no “patch” in the wings should this effort fail.