Bipartisan Bill to Repeal SGR Hits Partisan Rocks

March 12, 2014

Bipartisan legislation to repeal Medicare's sustainable growth rate (SGR) formula for physician reimbursement has taken a partisan turn that threatens its passage, and organized medicine is crying foul.

Rep. David Camp (R-MI) yesterday proposed an amendment to the SGR repeal bill that would delay the mandate in the Affordable Care Act (ACA) for individuals to obtain health insurance coverage by 5 years. Technically, it would delay imposing the tax penalty for not obtaining coverage, which would amount to a mandate in name only. The amendment is the latest in a series of efforts by the Republican-controlled House to gut the healthcare reform law.

A House vote on the amended bill, called the SGR Repeal and Medicare Provider Payment Modernization Act, could happen this Friday. If passed, the bill is considered dead on arrival in the Democrat-controlled Senate, which is loath to remove a central pillar of the ACA. Senate Majority Leader Harry Reid (D-NV) said the addition of the mandate delay had "no credibility," according to Reuters.

Unless Congress acts to avert it, the SGR formula will trigger a 23.7% cut in Medicare pay on April 1 and possibly motivate physicians to stop seeing new or existing Medicare patients. With the repeal bill's fate in jeopardy, lawmakers may once again delay the massive cut, perhaps until January 1, in a legislative move called a "patch." Congress has patched similar SGR-mandated cuts on an annual basis going back to 2003.

Ostensibly, the amendment is designed to make repeal of the SGR formula financially possible. The Congressional Budget Office (CBO) estimates that delaying the individual mandate for 5 years would save almost $170 billion over 10 years. The savings would stem from fewer people choosing to obtain coverage through Medicaid or a private plan offered on a health insurance exchange absent any penalty. In all, the amendment would increase the number of uninsured by roughly 13 million in 2018 and boost premiums in the individual insurance market by 10% to 20%, according to the CBO. As a result, the federal government wouldn't have to spend as much in the form of premium subsidies for individuals and Medicaid contributions to states.

Republicans intend to use the savings to foot the 10-year, $138 billion cost of repealing the SGR formula and shifting Medicare reimbursement from fee-for-service to pay-for-performance. Such offsets, designed to avoid deficit spending, are known on Capitol Hill as "pay-for's."

The White House today promised to veto the SGR repeal bill because of the amendment delaying the individual mandate. In a statement issued today, the White House Office of Management and Budget praised the bipartisanship that led to the original bill, but warned that the amendment would reduce health insurance coverage and increase costs for millions of Americans.

Need for a Bipartisan "Pay-For"

Leaders of organized medicine saw this GOP amendment to the SGR repeal bill shaping up earlier this month, and rang alarm bells in response.

"Efforts to tie the SGR repeal legislation to partisan 'pay-for's' would consign this bill to failure in one or both chambers of Congress," said Reid Blackwelder, MD, president of the American Academy of Family Physicians, in a news release on March 10. Dr. Blackwelder also expressed dismay that the contemplated legislation would help millions of Medicare beneficiaries but eliminate access to care for millions of others.

The American College of Physicians (ACP) was displeased, too. "We cannot support linking SGR repeal to changes in current law that will result in fewer people getting health insurance coverage," ACP President Molly Cooke, MD, said in a news release.

Norman Vinn, MD, president of the American Osteopathic Association, urged Congressional leaders in a statement yesterday to reach an agreement on pay-for's "in the same spirit of bipartisanship that fostered…this legislation."

Congress heard a different message from another group of physicians who happen to be lawmakers themselves. Eighteen members of the House GOP Doctors Caucus, which consists of physicians, nurses, and other clinicians, sent a letter to their colleagues yesterday stating that SGR repeal would not happen without bipartisan agreement on how to offset the cost. Nevertheless, the Doctors Caucus members asked House members to pass the SGR repeal bill along with a delay of the individual mandate.

A "yes" vote, they said, would advance the legislation to the Senate and spur "a bipartisan bicameral dialogue that will ultimately bring this desperately needed legislation to the president's desk."

The Senate is considering an identical SGR repeal bill, but Senate Democrats have not yet proposed any pay-for's.

Both the House and Senate will not be in session next week, leaving them less than 2 weeks to forge an agreement before Medicare reduces physician reimbursement by 23.7%. In an interview published online yesterday by HealthLeaders Media, Rep. Phil Gingrey, MD (R-GA), cochair of the Doctors Caucus, said that the chances of passing the SGR repeal bill before April 1 "are not great."

"That would require another short-term patch," Dr. Gingrey told HealthLeaders Media, adding that he hoped Congress would pass a repeal bill before the November election.

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