Wealthy seniors to pay more for Medicare under bill
passed to fix doctor pay
Medicare’s troubled physician
payment formula will soon be history, Congress passed bill and here is what
By Mary Agnes Carey, Kaiser Health News
April 15, 2015 - As expected, the
Senate last night easily passed legislation to scrap the formula,
accepting a bipartisan plan muscled through the House last month by
Speaker John Boehner and Democratic leader Nancy Pelosi. The Senate vote
came just hours before doctors faced a 21 percent Medicare pay cut.
Under the bill, the current
reimbursement schedule would be
replaced with payment increases for
doctors for the next five years as Medicare transitions to a new system
focused “on quality, value and accountability.” Existing payment
incentive programs would be combined into a new “Merit-Based Incentive
Payment System” while other alternative payment models would also be
“Passage of this historic
legislation finally brings an end to an era of uncertainty for Medicare
beneficiaries and their physicians — facilitating the implementation of
innovative care models that will improve care quality and lower costs,”
said Dr. James L. Madara, chief executive officer of the American
Medical Association. “Patients will be able to get the care they need
The Senate voted 92 to 8 to approve
the legislation, which the House passed 392-37.
It now moves to President Barack
Obama, who — shortly after the Senate vote — said he would sign the
bill, calling it “a milestone for physicians, and for the seniors and
people with disabilities who rely on Medicare for their health care
There’s enough in the
for both sides to love or hate. “Like any large bill it’s a mixed bag in
some respects, but I think on the whole it’s a bill well worth
supporting,” Senate Majority Leader Mitch McConnell, R-Ky., said
The bill includes two years of
funding for an unrelated program, the Children’s Health Insurance
Program, or CHIP. 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 $210 billion package. The Congressional Budget Office has
said the bill would add $141 billion
to the federal deficit.
Consumer and aging organizations
also have expressed concerns
that beneficiaries will face greater out-of-pocket expenses on top of
higher Part B premiums to help finance the way Medicare pays physicians.
But lawmakers said they had struck
a good balance in their quest to get rid of the old system. “I think
tonight is a milestone for the Medicare program, a lifeline for millions
of older people,” said Sen. Ron Wyden, D-Ore. “That’s because tonight
the Senate is voting to retire the outdated, inefficiency rewarding,
common sense-defying Medicare reimbursement system.”
For doctors, the passage is an end
to a familiar but frustrating
rite. Lawmakers have invariably
deferred the cuts prescribed by a 1997 reimbursement formula, which
everyone agreed was 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.
Here are some answers to frequently
asked questions about the legislation and the congressional ritual known
as the doc fix.
Q: How would the bill change the way Medicare
The House package would scrap the
old Medicare physician payment rates, which were set through a formula
based on economic growth, known as the “sustainable growth rate” (SGR).
Instead, it would give doctors an 0.5 percent bump in 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.
That transition follows similar efforts in the federal health law to
link Medicare reimbursements to quality metrics.
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 reward providers who receive a “significant
portion” of their revenue from an “alternative payment model” or
patient-centered medical home with a 5 percent payment bonus. It would
also allow broader use of Medicare data for “transparency and quality
House Energy and Commerce Committee
Chairman Fred Upton, R-Mich., one of the bill’s drafters, has called it
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.”
A “technical advisory committee”
will review and recommend how to develop alternative payment models.
Measures will be developed to judge the quality of care provided and how
physicians will be rewarded or penalized based on their performance.
While the law lays out a structure on how to move to these new payment
models, much of their development will be left to future administrations
and federal regulators. Expect heavy lobbying from the physician
community on every element of implementation.
Q. Will seniors have to help pay for the plan?
Starting in 2018, wealthier
Medicare beneficiaries (individuals with incomes above $133,500, with
thresholds higher for couples), would pay more for their Medicare
coverage, a provision expected to impact 2 percent of beneficiaries.
In addition, starting
in 2020, “first-dollar” supplemental Medicare insurance known as
“Medigap” policies 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. If the policy had been implemented in
2010, it would have affected Medigap coverage for roughly 10 percent of
all 65-year-olds on Medicare, according to an analysis
from the Kaiser Family Foundation. Based on declining Medigap enrollment
trends among 65-year-olds, expect this policy to impact a smaller share
of new Medicare beneficiaries in the future, according to the study.(KHN
is an editorially independent program of the foundation.)
Experts contend that the
“first-dollar” plans, which cover nearly all deductibles and
co-payments, keep beneficiaries from being judicious when making medical
decisions because they are not paying anything out-of-pocket and those
decisions can help drive up costs for Medicare.
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
AARP, a seniors’ lobby group,
sought to repeal a cap on the amount of therapy services Medicare
beneficiaries could receive, telling senators that it would be a “key
vote” for the organization.
“Similar to the SGR debate, an
extension of the therapy cap — rather than full repeal — is
short-sighted and puts beneficiaries in a dire situation when the
extension expires,” AARP Executive Vice President Nancy LeaMond wrote in
to senators. “This amendment is important to the overall success of the
Medicare program and the health and well-being of Medicare’s
beneficiaries.” The amendment failed.
Q. What about other facilities that provide care
to Medicare beneficiaries?
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.
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. What is the plan for CHIP?
The bill adds 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 had not been extended beyond the end of
The length of the proposed
extension was problematic for Democrats, especially in the Senate. In
February, 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. A Senate amendment to extend CHIP funding for four
Q. What else is in the SGR deal?
The package, which Boehner, R-Ohio,
and Pelosi, D-Calif., began negotiating in March, also includes an
additional $7.2 billion for community health centers over the next two
years. NARAL Pro-Choice
America and Planned Parenthood have
criticized the provision 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 before the House vote, Pelosi has said that 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.”
Q. How did the doctor payment formula become an
Today’s problem is a result of
efforts years ago to control federal spending — a 1997 deficit reduction
law that set the SGR formula. 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 by 4.8 percent. Every year since, Congress
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
flawed” and has called for its repeal.
The SGR provides “no incentive for providers to restrain volume,” the
Q. Why haven’t lawmakers simply eliminated the
Money was 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, and lawmakers could not
agree on how to pay for the plan.
This time Congress took a different
path. The measure both chambers approved is not fully paid for. 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 appeared willing to repeal the SGR on the basis that it’s a
budget gimmick – the cuts are never made – and therefore financing is
But some senators objected. In
remarks on the Senate floor, Sen. Jeff Sessions, R-Ala., said any repeal
of the SGR “should be done in a way that should be financially sound.”
Most lawmakers felt full financing
for the Medicare extenders, the CHIP extension and any increase in
physician payments over the current pay schedule was needed. Those items
account for about $70 billion of financing in the approximately $210
Conservative groups urged
Republicans to fully finance any SGR repeal and said they would be
watching senators’ actions closely. For example, the group Heritage
Action for America promised to “key vote” an amendment that the measure
be fully financed. That amendment failed.
Some members of Congress seemed
pleased to have this recurring debate behind them. “Stick a fork in it,”
said Rep. Upton. “It’s finally done.”
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