The End of SGR?

by Samantha Beasley, Senior Public Policy Manager, L.A. Area Chamber

House leaders from both sides of the aisle are finally coming together to change the way the federal government pays Medicare doctors. Championed by House Speaker John Boehner and Democratic Leader Nancy Pelosi, H.R. 2, the Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act, was introduced on Monday to permanently repeal and replace the sustainable growth rate (SGR) formula for Medicare payments to physicians. Without a remedy or replacement plan in place before the current ‘doc fix’ expires, physicians would see a 21 percent cut in Medicare payments on April 1.

In addition, H.R 2 funds CHIP for two years and includes a six-month delay in the enforcement of the two-midnight rule and a one-year delay in Medicaid disproportionate share hospital cuts, as well as extensions of the therapy cap exceptions process and payments for Medicare-dependent hospitals.

Leaders are hoping that with the total savings reported by the Congressional Budget Office (CBO), they will be able to pass through short-term costs to challengers of the proposal in order to bring about the long-term structural changes to Medicare that both parties have been seeking. These include a minimum of a 15 percent premium increase for single seniors making more than $133,000 per year and married couples making more than $266,000 per year.

The replacement policy will move away from volume-based payments for physicians, and instead focus more on a value-based system where doctors would be rewarded for higher quality of care rather than high patient loads. In this, the legislation would establish a variety of quality assurance measures to incentivize physicians to provide better care to receive higher payment. However, some are now arguing that we don’t know enough to define and measure what constitutes value and quality care.

While bipartisan agreement grows in Congress, outside organizations are raising their voices. The AARP, for instance, has expressed concerns that the proposal just shifts costs to beneficiaries, while the California Hospital Association supports the legislation because (in part) it rejects cuts to graduate medical education and does not allow an additional delay in the implementation of ICD-10.

But time is of the essence.

H.R. 2 is expected to pass by a wide margin in the House. However, it is uncertain whether the measure will see action in the Senate before the Legislature enters recess at the end of this week. According to California Health Line:

Sen. Richard Durbin (D-Ill.) said it seemed unlikely that the Senate would take action on the measure this week… Meanwhile, Senate Minority Leader Harry Reid (D-Nev.) remained noncommittal about whether Senate Democrats would support the deal. He said, "I believe we should wait until we get what they've done in the House"...

There is also an option for the Centers for Medicare & Medicaid Services (CMS) to give Congress more time to consider the replacement SGR bill if lawmakers are unable to pass the measure before adjourning for recess. But this could only occur for a few weeks before CMS would have to start paying physicians at the reduced rates.