27, 2015 - The House Thursday overwhelmingly passed legislation to scrap
Medicare’s troubled physician payment formula, just days before a March
31 deadline when doctors who treat Medicare patients will see a 21
percent payment cut. Senate action could come this week as well, but
probably not until the chamber completes a lengthy series of votes on
the GOP’s fiscal 2016 budget package.
a summary of the
bill, unveiled by Republican and Democratic committee leaders earlier
this week, the current system would be
scrapped and replaced with
payment increases for doctors for the next five years as Medicare
transitions to a new system focused “on quality, value and
There’s enough in the wide-ranging
deal for both sides to love or hate.
Senate Democrats have pressed to
add to the proposal four years of funding for an unrelated program, the
Children’s Health Insurance Program, or CHIP. The House package extends
CHIP for two years. In a statement Saturday,
Senate Finance Democrats said they were “united by the necessity of
extending CHIP funding for another four years” but others have suggested
they may support the package.
Some senators have also raised
concerns about asking Medicare beneficiaries to pay for more of their
medical care, the impact of the package on women’s health services and
cuts to Medicare providers.
In a letter to House members before
Thursday’s vote, the seniors group AARP said the legislation places
“unfair burdens on beneficiaries. AARP and other consumer and aging
organizations remain concerned that beneficiaries account for the
largest portion of budget offsets (roughly $35 billion) through greater
out-of-pocket expenses” on top of higher Part B premiums that
beneficiaries will pay to prevent the scheduled cut in Medicare
Some Democratic allies said the
CHIP disagreement should not undermine the proposal. After the House
approved the SGR package by a vote of 392-37, Ron Pollack, executive
director of the consumers group Families USA, urged the Senate to “adopt
a CHIP funding bill as soon as possible. Families USA believes that a
four-year extension is preferable to two years. We also know that time
is of the essence, and it is crucial that the Senate act quickly.”
Some GOP conservatives and
Democrats are unhappy that the package isn’t fully paid for, with policy
changes governing Medicare beneficiaries and providers paying for only
about $70 billion of the approximately $200 billion package. The
Congressional Budget Office Wednesday said the bill would add
$141 billion to the
For doctors, the package offers an
end to a familiar but frustrating
rite. Lawmakers have invariably deferred the cuts prescribed
by a 1997 reimbursement formula, which everyone agrees is broken beyond
repair. But the deferrals havealways been temporary because
Congress has not agreed tooffsetting cuts to pay for a permanent
fix. In 2010, Congress delayed scheduled cuts five times. In a statement
Sunday, the American Medical Association urged Congress “to seize the
moment” to enact the changes.
Here are some answers to frequently
asked questions about the proposal and the congressional ritual known as
the doc fix.
Today’s problem is a result of
efforts years ago to control federal spending – a 1997 deficit reduction
law that called for setting Medicare physician payment rates through a
formula based on economic growth, known as the “sustainable growth rate”
(SGR). For the first few years, Medicare expenditures did not exceed the
target and doctors received modest pay increases. But in 2002, doctors
were furiouswhen their payments were reduced 4.8 percent. Every
year since, Congress has staved
off the scheduled cuts. But each deferral just increased the
size of the fix needed the next time.
The Medicare Payment Advisory
Commission (MedPAC), which advises Congress, saysthe SGR is“fundamentally
flawed” and has called for its repeal. The SGR provides “no
incentive for providers to restrain volume,” the agency said.
Q. Why haven’t lawmakers simply
eliminated the formula before?
Money is the biggest problem. An
earlier bipartisan, bicameral SGR overhaul plan produced jointly by
three key congressional committees would cost $175 billion over the next
decade, according to the Congressional
Budget Office. While that’s far less than previous estimatesfor
SGR repeal, it is difficult to find consensus on how to finance a fix.
For physicians, the prospect of
facing big payment cuts is a source of mounting frustration. Some say
the uncertainty has led them to quit the program, while others are
threatening to do so. Still, defections have not been significant to
date, according to MedPAC.
In a March
2014 report, the panel stated that beneficiaries’ access to
physician services is “stable and similar to (or better than) access
among privately insured individuals ages 50 to 64.” Those findings could
change, however, if the full force of SGR cuts were ever implemented.
“The flawed Sustainable Growth Rate
(SGR) formula and the cycle of patches to keep it from going into effect
have created an unstable environment that hinders physicians’ ability to
implement new models of care delivery that could improve care for
patients,” said Dr. Robert M. Wah, president of the American Medical
Association. “We support the policy to permanently eliminate the SGR and
call on Congress to seize the moment and finally put in place reforms
that will foster innovation and put us on a path towards a more
sustainable Medicare program.”
Q: What are the options that
Congress is looking at?
The House package would scrap the
SGR and give doctors a 0.5 percent bump for each of the next five years
as Medicare transitions to a payment system designed to reward
physicians based on the quality of care provided, rather than the
quantity of procedures performed, as the current payment formula does.
The measure, which builds upon
last year’s legislation
from the House Energy and Commerce and Ways and Means Committees and the
Senate Finance Committee, would encourage better care coordination and
chronic care management, ideas that experts have said are needed in the
Medicare program. It would give a 5 percent payment bonus to providers
who receive a “significant portion” of their revenue from an
“alternative payment model” or patient-centered medical home. It would
also allow broader use of Medicare data for “transparency and quality
“The SGR has generated repeated
crises for nearly two decades,” Energy and Commerce Committee Chairman
Fred Upton, R-Mich., one of the bill’s drafters, said in a statement.
“We have a historic opportunity to finally move to a system that
promotes quality over quantity and begins the important work of
addressing Medicare’s structural issues.”
The package, which House Speaker
John Boehner, R-Ohio, and Minority Leader Nancy Pelosi, D-Calif., began
negotiating weeks ago, also includes an additional $7.2 billion for
community health centers over the next two years. NARAL Pro-Choice
denounced the deal because
the health center funding would be subject to the
Hyde Amendment, a common
legislative provision that says federal money can be used for abortions
only when a pregnancy is the result of rape, incest or to save the life
of the mother.
In a letter to Democratic
colleagues, Pelosi said the funding would occur “under the same terms
that Members have previously supported and voted on almost every year
since 1979.” In a
statement, the National
Association of Community Health Centers said the proposal “represents no
change in current policy for Health Centers, and would not change
anything about how Health Centers operate today.”
A summary of the House
plan says the package also includes other health measures – known as
extenders – that Congress has renewed each year during the SGR debate.
The list includes funding for therapy services, ambulance services and
rural hospitals, as well as continuing a program that allows low-income
people to keep their Medicaid coverage as they transition into
employment and earn more money. The deal also would permanently extend
the Qualifying Individual, or QI program, which helps low-income seniors
pay their Medicare premiums.
Q. What is the plan for CHIP?
The House plan would add two years
of funding for CHIP, a federal-state program that provides insurance for
low-income children whose families earned too much money to qualify for
Medicaid.While the health law continues
CHIP authorization through 2019, funding for the program has
not been extended beyond the end of September.
The length of the proposed
extension could cause strains with Senate Democrats beyond those on the
Finance panel who have raised objections to the House package. Last
month, the Senate Democratic caucus signed on to legislation from
Sen. Sherrod Brown, D-Ohio, calling for a four-year extension of the
current CHIP program.
Q: How would Congress pay for
all of that?
The measure the House passed does
not. That is a major departure from the GOP’s mantra that all
legislation must be financed. Tired of the yearly SGR battle, veteran
members in both chambers may be willing to repeal the SGR on the basis
that it’s a budget gimmick – the cuts are never made – and
therefore financing is unnecessary. But that strategy could run into
stiff opposition from Republican lawmakers and some Democrats.
Most lawmakers feel the need to
find financing for the Medicare extenders, the CHIP extension and any
increase in physician payments over the current pay schedule. Those
items account for about $70 billion of financing in the approximately
$200 billion package.
Conservative groups are
urging Republicans to fully finance any SGR repeal. “Americans didn’t
hand Republicans a historic House majority to engage in more deficit
spending and budget gimmickry,” Dan Holler, communications director for
Heritage Action for America, said earlier this month.
Q. Will seniors and Medicare
providers have to help pay for the plan?
Starting in 2018, wealthier
Medicare beneficiaries (individuals with incomes between $133,500 to
$214,000, with thresholds likely higher for couples) would pay more for
their Medicare coverage, a provision impacting just 2 percent of
beneficiaries, according to the summary.
Starting in 2020, “first-dollar”
supplemental Medicare insurance known as “Medigap” would not be able to
cover the Part B deductible for new beneficiaries, which is currently
$147 per year but has
increased in past years.
But the effect of that change may
be mitigated, according to one analysis.
“Because Medigap policies would no
longer pay the Part B deductible, Medigap premiums for the affected
policies would go down. Most affected beneficiaries would come out ahead
— the drop in their Medigap premiums would exceed the increase in their
cost sharing for health services,” according to
an analysis from the
Center on Budget and Policy Priorities, a left-leaning think tank. “Some
others would come out behind. In both cases, the effect would be small —
generally no more than $100 a year.”
Experts contend that the
“first-dollar” plans, which cover nearly all deductibles and
co-payments, keep beneficiaries from being judicious when making medical
decisions. According to lobbyists and aides, an earlier version of the
“doc fix” legislation that negotiators considered would have prohibited
“first dollar” plans from covering the first $250 in costs for new
Post-acute providers, such as
long-term care and inpatient rehabilitation hospitals, skilled nursing
facilities and home health and hospice organizations, would help finance
the repeal, receiving base pay increases of 1 percent in 2018,
about half of what was previously expected.
Other changes include phasing in a
one-time 3.2 percentage-point boost in the base payment rate for
hospitals currently scheduled to take effect in fiscal 2018. The number
of years of the phase-in isn’t specified in the bill summary.
Scheduled reductions in Medicaid
“disproportionate share” payments to hospitals that care for large
numbers of people who are uninsured or covered by Medicaid would be
delayed by one year to fiscal 2018 but extended for an additional year
to fiscal 2025.
Q. How quickly could the Senate
The wide margin of passage in the
House, plus the Obama administration’s
support of the measure,
may put pressure on senators to pass the bill once they conclude work on
the chamber’s fiscal 2016 budget resolution later Thursday or early
Friday morning. But Senate Democrats and Republicans may want to offer
amendments to the House bill, which could mean that the chamber does not
resolve the SGR issue before the Senate’s two-week break, which is
scheduled to begin March 30.
If the SGR issue can’t be resolved
by March 31, Congress could pass a temporary patch as negotiations
continue or ask the Centers for Medicare and Medicaid Services, which
oversees Medicare, to hold the claims in order to avoid physicians
seeing their payments cut 21 percent. However, Speaker Boehner has said
the House will not consider a temporary patch before leaving for its
This article was updated to
include House floor action on Thursday.
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