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.
Definition: Outlays refers to the actual disbursement of funds by the U.S. Treasury to meet obligations incurred by the federal government. They are typically referred to as spending or expenditures.
Used in a sentence: “The U.S. government posted the widest monthly budget surplus in more than five years in June, as spending plunged 47 percent and a stronger economy lifted tax receipts, the Treasury Department said.
Receipts exceeded outlays by $116.5 billion last month, the biggest surplus since April 2008, compared with a $59.7 billion deficit in June 2012, the Treasury said today in Washington. The result exceeded the $115 billion median estimate in a Bloomberg survey of 21 economists.” -Bloomberg
History: Article I, Section 9, Clause 7 of the United States Constitution states:
“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of Receipts and Expenditures of all public Money shall be published from time to time.”
In a textbook budget process, the President proposes a budget to Congress on a yearly basis in the beginning February. Subsequently, both the House and Senate propose and pass their own budgets and reconcile them to set “top-line” numbers for the relevant accounts within the federal government. These “budgets resolutions,” are not signed by the President, and do not carry the force of law. From these numbers, the House and Senate appropriations committees divide the allocations among the 12 subcommittees, thus determining the actual funding levels for each agency and program. These bills are signed by the President and carry the force of law. From this process the federal government is authorized to produce expenditures or outlays to pay for the programs necessary to continue government operations.
“Examining Concerns Regarding FDA’s Proposed Changes to Generic Drug Labeling”
April 1, 2014 – 3:00pm
2322 Rayburn House Office Building
“Drug Enforcement Administration and State of Research on Drug Abuse in America”
April 2, 2014 – 10:00am
H-305, the Capitol Building
“Defense Health Program”
April 2, 2014 – 1:30pm
2359 Rayburn House Office Building
“Examining ObamaCare’s Problem-Filled State Exchanges”
April 3, 3014 – 10:00am
2154 Rayburn House Office Building
“Helping Families in Mental Health Crisis Act of 2013”
April 3, 2014 – 10:30am
2322 Rayburn House Office Building
“A Continued Assessment of Delays in VA Medical Care and Preventable Veteran Deaths:
April 9, 2014 – 10:00am
334 Cannon House Office Building
Term: Overseas Contingency Operations (OCO)
Definition: OCO funding is money set aside in the federal budget for expenses connected to overseas operations such as: crisis response, infrastructure and coalition support for operations in Iraq/Afghanistan, humanitarian assistance in the Middle East and North Africa, and embassy security among other needs abroad.
Used in Sentence: “‘I have received some questions about the willingness to do OCO as a pay-for,” Fisher wrote. “Chairman Wyden is VERY OPEN to considering OCO as a pay-for. If that is the position of your organization, please include that in your support letters … [and] convey this sentiment in your meetings with senators.’ The email sheds light on the status of negotiations over a permanent “doc fix.” Lawmakers are closer than ever to repealing the SGR, but deciding how to offset the reform is proving a major challenge.
Wyden, the Finance Committee’s newly installed chief, is hardly the first lawmaker to suggest war spending as a way to fund an SGR fix. The idea has been proposed by House Democrats and has support from major players in the medical community. -The Hill
History: Following the terror attacks of 2011, President George W. Bush’s administration requested Congress provide specific funds to pursue the “Global War on Terror.” Beginning in 2009 the administration of President Barack Obama changed from using the “Global War on Terror” terminology to instead employing the nomenclature of “Overseas Contingency Operations” and the funds to support the effort became known as OCO. Due to the reduced U.S. military presence in Iraq and Afghanistan, the need for OCO funding is declining. In Fiscal Year (FY) 2013 OCO outlays/expenditures were $93 billion and the President’s request for OCO in FY 2015 has decreased to $85 billion. Currently, there is a debate in Congress about the possibility of using the OCO funds as “savings” to pay-for other expenses (i.e. SGR)—Democrats contend that reallocating OCO funds would account for actual savings, while Republicans claim that since the monies have not actually been spent it is not real savings, just money the nation no longer needs to spend.
“Access and Cost: What the US Health Care System Can Learn from Other Countries”
March 11, 2014 – 10:00am
430 Dirksen Senate Office Building
“Hearing on the President’s Fiscal Year 2015 Budget Proposal with U.S. Department of Health and Human Services Secretary Kathleen Sebelius”
March 12, 2014 – 10:00am
1100 Longworth House Office Building
“Protecting the Public Health: Examining FDA’s Initiatives and Priorities”
March 13, 2014 – 10:00am
430 Dirksen Senate Office Building
“Hearing on the Department of Health and Human Services”
March 13, 2014 – 10:00am
2358-C Rayburn House Office Building
“Improving Sports Safety: A Multifaceted Approach”
March 13, 2014 – 10:15am
2322 Rayburn House Office Building
Several subcommittees of the House of Representatives have posted their deadlines for receiving Members’ programmatic and language submissions for consideration in the FY 2015 Appropriations bill. Submissions are to be delivered electronically at http://appropriationssubmissions.house.gov beginning on February 26, 2014. Most subcommittees have posted deadlines in late March – early April. If a subcommittee has not yet indicated a deadline, Dear Colleague letters with Member Submission instructions will be posted as soon as they have been circulated. To view the entire list, please click here.
Election year politics already have arrived at the Capitol. Members of the House and Senate in both parties have their eyes on November 4th and are putting forward agendas and proposals to position themselves favorably in the eyes of the electorate. Look and listen for a lot of rhetoric—and possibly some action—on jobs and the economy. With a significant number of Democratic Senate retirements and numerous competitive races, conventional wisdom is that control of the Senate is in play and that Republicans have a solid chance of taking the chamber in the November election. Pundits agree that the House remains solidly in Republican control and the Democrats will remain in the minority for the next two years.
With the budget deal struck by Senator Patty Murray (D-WA) and Representative Paul Ryan (R-WI) late last fall, much of the Congressional work on the budget and federal appropriations already has been predetermined for the year. Treasury Secretary Jack Lew recently announced the nation will hit its debt ceiling on February 27th; so before the deadline, the Congress is expected to enact a measure to increase the nation’s borrowing authority without the previous political jockeying and drama.
Senate Finance Committee Chairman Max Baucus (D-MT) was confirmed as U.S. Ambassador to China late last week—causing a Senatorial game of musical chairs with respect to the chairmanship of numerous committees. The Senate Finance Committee, which has tax policy writing authority, will soon be led by Ron Wyden (D-OR), who has expressed an interest in rewriting the tax code. Changes he wishes to make include increasing the standard deduction, using the tax code to incentivize businesses to invest overseas earnings in domestic infrastructure, and bringing closer in line the taxation of investment income and ordinary income.
The latest in the implementation of the Affordable Care Act: on Monday, February 10th the White House announced it again was modifying the requirement for businesses with between 50 and 99 employees—they now have until 2016 to provide health insurance to full-time workers (those working at least 30 hours a week) or pay a penalty. This requirement already had been delayed a year; such businesses have one more year without being subject to the mandate. Beginning this year, businesses with more than 100 full-time workers are required to offer coverage to at least 70 percent of their full-time workers or face a penalty; starting next year they must offer health care to 95 percent of their full-time workforce.
Meanwhile, Republicans in the House of Representatives are seeking to change the Affordable Care Act definition of full-time workers from 30 hours a week to 40; earlier this week, the proposal gained some momentum with three Democrats signing on as cosponsors of the measure. However, with the Democrats still in control of the Senate, at least through this calendar year, it is highly unlikely such a measure would be brought up for a vote in that chamber. Should the Republicans sweep in November, it is likely that starting in 2015, the President will be sent numerous measures related to repealing or replacing provisions of the Affordable Care Act; if such legislation is attached to other proposals, President Obama will be put in a difficult position of deciding whether or not to enact or veto them. Only time and the election will tell what the future holds with respect to the long term viability of health care reform.
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).
Senate and House negotiators reached an agreement yesterday, December 10, 2013, on top line numbers for Fiscal Year (FY) 2014 and FY 2015 spending and partial replacement of the sequester cuts.
It is being reported that the “bipartisan package includes $63 billion of ‘sequester relief,’ $85 billion of total savings, and $23 billion in net deficit reduction. The agreement would set the discretionary spending level for fiscal year 2014 at $1.012 trillion, and $1.014 trillion in FY 2015.” Click here to view the Politico article.
A summary, section by section, and legislative text of the budget deal can be found here.
The House is expected to consider the proposal as early as tomorrow, Thursday December 12th. While there are rumblings in the press that some conservatives and some Democrats are not happy with the deal it is too soon to know if that is the sign of a true compromise or trouble brewing in the wings.
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).