Number 17: Congress Patches the SGR Yet Again

For the 17th time since the Sustainable Growth Rate (SGR) became law as part of the Balanced Budget Act of 1997, last week the Congress passed a short-term “patch” to prevent scheduled cuts from going into effect for physicians who provide care to Medicare beneficiaries.  Staving off the more than 20% in payment cuts, on April 1st, President Obama, signed into law the Protecting Access to Medicare Act of 2014.  In addition to preventing the scheduled payment reductions from going into effect, the new law continues a 0.5 percent update for physicians through December 31, 2014, and then maintains reimbursement levels for the first quarter of 2015.  The SGR, long-recognized by health care providers and policymakers as in serious need of reform, is the formula used by the Centers for Medicare and Medicaid Services (CMS) to control spending and growth related to physician services provided to Medicare beneficiaries. Over the past six months, leaders and members of the House Ways and Means, House Energy and Commerce, and Senate Finance Committee achieved a rare bipartisan, bicameral consensus with respect to how to repeal the SGR and replace it with a more appropriate payment policy.  The result of their efforts culminated in the introduction of the SGR Repeal and Medicare Provider Payment Modernization Act of 2014.  Despite agreement on the policy, Members of Congress unfortunately were unable to craft a deal with respect to how to pay for the estimated $140-180 billion price-tag.  Therefore, with the April 1st deadline looming, Congressional leaders negotiated a smaller package of health care policies, which included a short-term “patch” for the SGR.  The policies include (but are not limited to):  an extension of the partial enforcement delay for the Medicare so-called “two-midnight rule,” which effects payment for inpatient stays at acute care hospitals; a one-year delay in implementation of the new ICD-10 coding system; additional authorization for the Special Diabetes Program and the maternal, infant, and early childhood home visiting program; a Government Accountability Office study on Children’s Hospital Graduate Medical Education Program; a new program relating to value-based purchasing for skilled nursing facilities; and a new initiative related to quality, safety, and evidence-based care associated with diagnostic imaging.  The costs of the bill are paid for through a variety of policy changes, including:  extending the two percent Medicare sequestration; revaluing services under the physician fee schedule; reform of Medicare payment for clinical laboratory services; and rebasing of Medicaid Disproportionate Share Hospital payments.  Providers continue to urge Congress to take action to enact a permanent fix. Given that the latest “patch” expires March 31, 2015, prior to that date, Congress will need to take action on a permanent fix or enact the 18th patch.

SGR Markups Move Forward

Thursday, December 12, 2013, promises to be a busy day for physician groups and other stakeholders interested in Congressional action to repeal and replace the Sustainable Growth Rate (SGR) system.  (Background on the SGR is available here).

The Senate Finance Committee will hold a hearing on the Chairman’s mark (available here) and the House Ways and Means Committee announced it will hold a markup of its version of the legislation (legislative language is available here and a section-by-section summary is available here).  Both Committees’ actions will take place at 10 am tomorrow.  Like the Energy and Commerce Committee proposal, neither the Senate Finance Committee nor the House Ways and Means Committee proposal includes any offsets.

Meanwhile, the House is considering legislation that would postpone the imposition of the SGR cuts for three months and would give physicians a 0.5% update in their Medicare reimbursement.  (A copy of the legislation is available here).  The three-month patch also provides for a number of Medicare extenders and would delay Medicare’s controversial new “two-midnight” policy for inpatient hospital stays.

Congress is slated to adjourn by the end of the week.  While a permanent fix may not be possible in 2013, enactment of a permanent solution remains likely for 2014, particularly as CBO continues to reduce the 10 year score of the legislation (background available here).

CBO Reduces Cost of SGR Fix

On Friday, December 6, 2013, the independent Congressional Budget Office (CBO) gave renewed hope for all those pushing for a permanent fix to the SGR (background information on the SGR is available here).  In May, CBO estimated the 10-year score for a permanent fix (without any payment updates for physicians) would cost $139.1 billion.  CBO’s latest score estimates the same policy to cost $116.5 billion.  According to a footnote in the report, CBO’s revision is based in part on changes made by the Centers for Medicare & Medicaid Services (CMS) in its Medicare Physician Fee Schedule Final Rule.

CBO’s latest report comes in advance of the Senate Finance Committee markup of legislation to repeal and replace the SGR, at 10:00 am on Thursday, December 12th.  In October, the Senate Finance Committee and House Ways and Means Committee released a joint discussion draft of their proposal to repeal and replace the SGR (background available here).  House Ways and Means Committee Chairman Dave Camp (R-MI) issued a statement indicating his Committee is making progress on its version of legislation and may hold a hearing this week, though so far the hearing has not been formally announced.  The House Energy and Commerce Committee also drafted a proposal to address the SGR, which was voted on by the Committee in July (more information available here).

Health Care on the Hill – Upcoming Events

December 4, 2013; 3:00pm
“Adjudicating VA’s Most Complex Disability Claims: Ensuring Quality, Accuracy, and Consistency on Complicated Issues”
House Committee on Veterans’ Affairs, Subcommittee on Disability Assistance and Memorial Affairs (DAMA)
334 Cannon House Office Building

December 11, 2013; 2:15pm
“Protecting Seniors from Medication Labeling Mistakes”
Senate Special Committee on Aging
562 Dirksen Senate Office Building

December 12, 2013; 10:00am
“Open Executive Session to Consider an Original Bill to Repeal the Sustainable Growth Rate System and to Consider Health Care Extenders”
Senate Committee on Finance
215 Dirksen Senate Office Building

December 18, 2013; 2:15pm
“The Future of Long-Term Care Policy: Continuing the Conversation”
Senate Special Committee on Aging
562 Dirksen Senate Office Building

Dewonkify – Medicare Part B

Medicare is a federal program that provides health insurance coverage for people who are age 65 or older.  Individuals younger than 65 may qualify if they have certain disabilities or have End-Stage Renal Disease (ESRD).  Medicare is comprised of four parts — Parts A, B, C, and D.  Over the next few weeks, Capitol Health Record will dewonkify each of the four parts.

Definition:  Medicare Part B primarily pays for care provided by doctors and other health care professionals (like nurse practitioners), outpatient services, durable medical equipment (DME), home health, and some preventive services.

Used in a Sentence:  “The premiums for Medicare Part B will remain flat in 2014 and seniors have saved $8.3 billion on Part D prescriptions since the Affordable Care Act was enacted in 2010, the Department of Health and Human Services announced Monday. Medicare Part B covers medically necessary services, as well as preventive services.” From “Medicare Part B Premiums Won’t Go Up in 2014,” by Kelly Kennedy, USA Today, October 28, 2013

History:  Medicare Part B began in 1965 under the same legislation that enacted Medicare Part A and the Medicaid program.

Enrollment:  In 2012, 46.4 million Americans were enrolled in Medicare Part B.

Financing:  Medicare Part B is financed through general revenues and premiums collected from beneficiaries.  Because of the way it is financed, technically Medicare Part B can never be insolvent.  However, because the federal government pays 75 percent of the cost of Part B, many policymakers have begun to grow concerned about the increased cost of the program and have proposed ways to reduce these federal expenditures.

Sustainable Growth Rate (SGR):  Medicare Part B pays for services provided by physicians and other health care professionals using the SGR formula.  Unless Congress acts by the end of this year, physicians who treat Medicare beneficiaries will see their reimbursement cut by approximately 24 percent (the exact amount will be determined when the Centers for Medicare and Medicaid Services (CMS) releases its final rule implementing the Physician Fee Schedule).

Over the past decade, Congress has enacted more than 15 short-term fixes to address the SGR (see infographic).  In July the House Energy and Commerce Committee passed legislation to permanently address the SGR.  Last week, the House Ways and Means Committee and Senate Finance Committee jointly released a draft discussion guide which closely follows the Energy and Commerce proposal.

Premiums:  Medicare beneficiaries pay monthly premiums, which are adjusted each year and account for roughly 25 percent of Part B costs.  Currently most beneficiaries pay a monthly premium of $104.90 per month.  Individuals with higher incomes pay a higher monthly premium.  (More information on Medicare Part B premiums is available here.)  Individuals who lack other coverage (generally through a current or former employer) who delay signing up for Part B may be assessed a permanent late enrollment penalty.  (More information on the late enrollment penalty is available here.)

Out-of-Pocket Costs:  In addition to the monthly premium, beneficiaries have an annual deductible of $147 for 2013.  Beneficiaries also are assessed a copayment of 20 percent of the Medicare-approved cost of the service.  (More information is available here.) 

Bicameral, Bipartisan SGR Proposal Released

On Thursday, October 31, 2013, the Senate Finance Committee and the House Ways and Means Committee released a draft discussion of their proposal to permanently fix the sustainable growth rate (SGR) formula, which Medicare uses to reimburse physicians and other health care professionals.  (More information on the SGR is available here.)  This discussion draft is similar to legislation that unanimously passed out of the House Energy and Commerce Committee in July 2013.  (More information on the Energy and Commerce legislation is available here.)

The discussion draft would prevent the imposition of the SGR cuts (estimated to be 24 percent for 2014), but does not call for any payment increases through 2023.  Beginning in 2024, health care professionals who participate in advanced alternative payment models (see below) would be eligible for a two percent update, while all other health care professionals would receive a one percent update.  The Energy and Commerce Committee legislation called for a 0.5 percent increase in reimbursement over 5 years.

The discussion draft also seeks to adjust reimbursement based in part on performance.  Beginning in 2017, penalties that would have been assessed under three quality incentive programs – the Physician Quality Reporting System (PQRS), the Value-Based Modifier, and the Electronic Health Record (EHR) Meaningful Use program – would be made available to health care professionals who have demonstrated ability to deliver high-quality healthcare.

In addition, the discussion draft encourages health care professionals to participate in alternative payment models (APMs) that involve two-sided risk and measure the quality of care provided (e.g., patient-centered medical homes, accountable care organizations (ACOs), etc.).  Providers who obtain a significant portion of their revenue from such APMs would be eligible for bonus payments.

Finally, the discussion draft contains provisions designed to encourage care coordination for individuals who have complex chronic care needs by developing new payment codes for these services beginning in 2015.  The discussion draft seeks to improve the accuracy of the valuation of services provided to beneficiaries and sets a target for the identification and revaluation of misvalued services.  Under the proposal, professionals would be required to consult with appropriate use criteria when ordering advanced imaging and electrocardiogram services.

Interestingly, like the Energy and Commerce Committee legislation, this discussion draft does not contain any offsets.  The Congressional Budget Office (CBO) previously estimated a ten year freeze to physician payments would cost $139.1 billion; the Energy and Commerce legislation was estimated by CBO to cost $175 billion over ten years.  While this discussion draft has not yet been officially scored by CBO, sponsors reportedly have been working to reduce the overall score of their proposal relative to the Energy and Commerce Committee’s legislation.

So far the discussion draft has received positive feedback from the House Energy and Commerce Committee.  The American Medical Association (AMA) and American Medical Group Association (AMGA) have issued statements indicating they are pleased the issue is moving forward and are currently reviewing the discussion draft.

CBO Scores SGR Bill

Today the Congressional Budget Office (CBO) released a report estimating that it would cost $175 billion over ten years to enact the Energy and Commerce Committee’s proposal to repeal and replace the sustainable growth rate (SGR).  A copy of the CBO report is available here.  Background information on the SGR is available here.

On Wednesday, July 31st, the Energy and Commerce Committee unanimously passed H.R. 2810, a legislative proposal to repeal the SGR formula and impose a new mechanism by which Medicare would reimburse physicians and other health care professionals.  (More information on the Energy and Commerce Committee proposal is available here.)  H.R. 2810 did not include any offsets.  The House Ways and Means Committee, which also has jurisdiction over the issue, and the Senate Finance Committee are in the process of developing their own legislative proposals to address this issue.

House Energy and Commerce Committee Passes SGR Bill

On Wednesday, July 31, 2013, by a vote of 51-0, the full House Energy and Commerce Committee passed H.R. 2810, legislation that would repeal the sustainable growth rate (SGR) formula and impose a new mechanism by which Medicare would reimburse physicians and other health care professionals.  Background information on the SGR is available here and more information on the legislation as passed out of the Energy and Commerce Health Subcommittee is available here.

While the legislation enjoys bipartisan support, it is important to note that there currently are no provisions on how to pay for the cost of the legislation.  Earlier this year, the Congressional Budget Office (CBO) estimated a ten year freeze to physician payments would cost $139.1 billion.  While an official CBO score on H.R. 2810 has not been made available, the legislation is expected to cost significantly more than $140 billion.

Before the full House of Representatives votes on the legislation, the House Ways and Means Committee (which has joint jurisdiction with the House Energy and Commerce Committee on Medicare Part B issues) is expected to release its own version of the legislation.  The Senate Finance Committee also will work on legislation to address this issue.

Unless Congress acts by the end of the year, physicians who treat beneficiaries will face an estimated 25 percent reduction in their Medicare reimbursements.

House Committee Prepares SGR Legislation

On Thursday, July 18, 2013, the House Energy and Commerce Committee released an updated draft of their “legislative framework” to repeal and replace the sustainable growth formula (SGR).  More information from the Committee is available here and the latest draft of the legislative framework is available here.  Background information on the SGR is available here and information on the previous iterations of the legislative framework is available here.

The Congressional Budget Office (CBO) estimates that a ten year freeze to physician payments would cost $139.1 billion.  More information on the CBO score is available here.

Unless Congress acts by the end of the year, physicians who treat Medicare beneficiaries will face an estimated 24.4 percent reduction in their reimbursement.  The exact amount of the reduction will be announced when the Centers for Medicare & Medicaid Services (CMS) releases the Medicare Physician Fee Schedule final rule, which is expected in November 2013.  More information on the proposed rule is available here.

As with similar proposals, the latest draft of the legislative framework would repeal the SGR and replace it with a stable 0.5 percent payment update during the period 2014-2018.  At the end of this period, Medicare would implement an enhanced Physician Quality Reporting System (PQRS) system, under which provider reimbursement would be linked to the quality of the care they provide.

Alternatively, providers can choose to participate in an alternative payment model (e.g., patient-centered medical home, bundled episodes of care, etc.).  These new alternative payment models will encourage high value and high quality health care.

The latest draft legislative framework is authored by Rep. Mike Burgess (R-TX), Energy and Commerce Health Subcommittee Chairman Joseph Pitts (R-PA), Energy and Commerce Health Subcommittee Ranking Member Frank Pallone (D-NJ), Energy and Commerce Committee Chairman Fred Upton (R-MI), Energy and Commerce Ranking Member Henry Waxman (D-CA), and Rep. John Dingell (D-MI).  The revised framework does not include any pay-fors.

The Committee plans to markup the legislation on Monday, July 22nd and Tuesday, July 23rd.  A link to the background memo prepared by the Committee can be found here.

Little Change in CBO Score of SGR Fix

On Tuesday, May 14, 2013, the Congressional Budget Office (CBO) released its May baseline projections, including a revised score for the cost of a 10-year freeze to physician payments under Medicare.  Medicare currently reimburses physicians under a Sustainable Growth Rate (SGR) formula, which is widely viewed as broken.  The SGR – or so-called “doc fix” – has plagued the health policy world for more than a decade.

CBO’s most recent score estimates that it would cost $139.1 billion to freeze physician payments for the next 10 years.  This estimate is only slightly higher than CBO’s February estimate of $138 billion.  (More information on the February estimate, as well as background information on the SGR, is available here.)

Within the last ten days both the Senate Finance Committee and the House Ways and Means Committees have held hearings regarding reforming the way Medicare pays physicians.  Unless Congress acts by the end of the year, physicians who treat Medicare beneficiaries will face an estimated 25 percent cut to their Medicare reimbursement.