On New Year’s Day, the House of Representatives passed H.R. 8, the American Taxpayer Relief Act of 2012, to avoid going over the “fiscal cliff.” The final vote was 257-157, passing with 172 Democrats and 85 Republicans. (The bill passed the Senate at 2 am on New Year’s Day by a vote of 89-8.)
The final package included tax policies, a two month delay on the sequestration and a one year fix to the Sustainable Growth Rate.
Below are some documents on the package that passed Congress – including the bill, a Congressional Budget Office score, a summary and more.
American Taxpayer Relief Act Copy
One-Pager on America Tax Relief Act
Offsets Summaries – American Tax Relief Act
Extender Summaries – American Tax Relief Act
CBO Detail on SenateHR8-TitleVI
Joint Committee on Taxation – Estimated Revenue Effects of HR 8 the American Taxpayer Relief Act of 2012
White House Summary on Fiscal Cliff
Congress has ten days in which to ppass legislation to prevent physicians who treat Medicare beneficiaries from facing a 26.5 percent cut in their Medicare reimbursement. (For additional information on the SGR click here and here.) Yesterday, the Centers for Medicare and Medicaid Services (CMS) notified providers that should Congress fail to act before the first of the year, the Agency would hold claims until January 11, 2013, to give Congress additional time to act. It’s unknown whether Congress will meet it’s deadline, or whether (as they did several times in 2010) CMS will have to wait before reimbursing physicians under the Medicare program. This uncertainty is unnerving for beneficiaries (some of whom may face challenges finding a physician to treat them next month while physicians wait for Congress to act) as well as physicians (some of whom are threatening to leave the Medicare program). Yesterday, the American Medical Association sent yet another letter calling for Congress to act. Let’s hope the 112th Congress addresses this important issue before adjourning for what’s left of the end of 2012.
Word: Sustainable Growth Rate (SGR)
Definition: The Sustainable Growth Rate is a formula that is supposed to be utilized to determine Medicare Part B payment rates for physicians and other health professionals.
Used in a sentence: Medicare SGR sticker shock adds urgency to pay reform campaign
History: In 1997, Congress created the SGR formula in order to help limit spending on Medicare physicians’ services. Since 2002, what Medicare spends on physician services has exceeded a SGR formula cap, so physicians have faced payment cuts (also called negative updates). However, for the past decade, Congress has passed a series of short-term fixes (14 of them) to prevent the cuts from taking place, having to find other health care savings to offset the cost of fixing the physician cuts.
What’s the problem? Unless Congress passes another short-term or a longer-term fix to the SGR before the end of 2012, physicians who treat Medicare beneficiaries will face a 26.5 percent cut in their reimbursement. Such a cut would go into effect in January 2013.
Correcting the formula is not an easy task. The Congressional Budget Office estimates that even a one-year fix costs about $25 billion, and replacing the formula can cost as much as $376 billion over 10 years. Congress has yet to pass legislation addressing a permanent replacement formula for determining Medicare payment rates to physicians and other health professionals.
Join us in person or via webinar for our “Beltway Crystal Ball” discussion on Thursday, Oct. 4th from 12:00 pm – 1:30 pm Eastern. Click here to register!
Beltway Crystal Ball
Yesterday the Congressional Budget Office (CBO) released a revised score for fixing the Sustainable Growth Rate Formula (SGR), the formula by which Medicare reimburses physicians. Unless Congress acts by January 1, 2013, physicians and (other health care professionals) who treat Medicare beneficiaries will be hit with a 27 percent cut in their reimbursement. According to CBO’s latest report, it costs more than $18 billion to freeze physicians’ reimbursements at their current level for 2013.
SGR cuts are nothing new, though the amount of the cuts has varied over the years. For over a decade Congress has enacted legislation to temporarily prevent the cuts from taking place. In this Congress committees of jurisdiction – Senate Finance, House Energy and Commerce, and House Ways and Means – have held hearings or discussions on ways to fix the SGR, but so far there has been no consensus on how to move forward. Cost of replacing the SGR has certainly hampered efforts to develop a fix. CBO estimates that replacing the SGR formula can cost as much as $376.6 billion over 10 years. With very few legislative days remaining in this Congress, and what promises to be a lively lame-duck session, at this point many predict that Congress will once again enact a temporary fix to the problem.
Today DBR’s own Julie Scott Allen and Matt Amodeo hosted a Bloomberg BNA webinar entitled “Beyond ACOs: Value-Based Purchasing and Other Accountable Care Delivery Options.” This 90-minute webinar featured discussions on:
- The policy, politics, and economics of value-based purchasing – with a particular emphasis on the payment reform models called for under the Affordable Care Act (ACA);
- The current political climate including deficit reduction efforts, looming SGR cuts, sequestration, and FY2013 federal budget activities;
- Supreme Court’s decision on the constitutionality of the ACA and how it will likely affect value-based payment delivery models supported through the ACA;
- Overview of the current Medicare delivery system reform programs and initiatives including the value-based purchasing program; hospital readmission reduction program; hospital-acquired condition penalty; bundled payment demonstration; bundled payment for care improvement initiative (BPCII); accountable care organizations (ACOs); and
- Commercial market value-based purchasing models being tested across the country.
As the deadline of February 29 rapidly approaches, House and Senate negotiators continue to remain at an impasse on how to address the looming Medicare physician pay cut. Starting March 1, 2012, physician fees will be cut by 27 percent if an agreement is not reached to avoid the cuts with either a short- or long-term fix. The bipartisan group of lawmakers, several of whom also served on the failed Supercommittee last fall, have been considering proposals that would pay for a fix that lasts anywhere from 1 to 10 years. The disagreement on how to pay for the fix, which the Congressional Budget Office believes would be between $9 billion (one - year fix) and $316 billion (10 - year fix), does not always fall cleanly along partisan lines. Republican negotiators disagree among themselves on using war savings to cover part of the cost of the doc pay fix. Democrats have opposed House Republican proposals for significant cuts to hospitals to make up the cost. MedPAC data citing significantly higher Medicare costs for physician services performed in a hospital outpatient department versus a physician office have painted a bit of bull ’s eye on the hospitals, who are aggressively pushing back. If war funds are not an option, health providers fear cannibalism as the provider community seeks to protect its own and avoid being part of a list of offsets for a doc pay fix. Indeed, the same stalemate that affected the Supercommittee and House-Senate discussions that followed at the end of 2011 has reared its head again. This time, the deal - making is further complicated by election-year politics on an issue that affects the future of physician participation in Medicare, and therefore, access to Medicare services.
As Congress plays beat the clock, most people already have 2011 in the rear-view mirror and are looking to 2012, trying to discern what the Congress will do – or not – with respect to health care. With the November 6th election as the finish line, there are 311 calendar days and many fewer “legislative” days for Congress to meet and do any work. Factoring in scheduled recesses and adding in Mondays and Fridays, which Congress typically uses for “district work periods,” there are an estimated 109 actual days that Representatives and Senators will be in D.C. So, how will they use this precious time? Continue reading
– CMS has informed Congress that a failure to approve an SGR fix could “could cause the program’s computers to crash.” The fix continues to be held up by a standoff between House Republicans and the Senate and White House over a continuation of the payroll tax cut. Democrats yesterday signaled an unwillingness to consider a stand alone SGR bill.
– CMS also announced a new Independence at Home Demonstration to “provide chronically ill patients with a complete range of primary care services.”
– The National Institute for Health Care Reform has released a new report, which finds that additional resources beyond the Patient Protection and Affordable Care Act (PPACA) are needed to meet the rising demand for medical services in the coming years. “Even if PPACA policies are highly effective in bringing new practitioners into the workforce, they may be insufficient given the timeline to train new physicians and other primary care practitioners.”
– Another report issued by the National Academy of Social Insurance finds that the health care insurance exchanges set up under PPACA “will have market leverage similar to or even greater than that of large employers and can use their clout to drive better pricing, choices and quality for individuals and small businesses that have little or no leverage in today’s market.”