Societies Urge SGR Repeal in Lame-Duck Congress

October 02, 2014

Politics killed a bipartisan bill to repeal Medicare's notorious sustainable growth rate (SGR) formula for setting physician pay in March, but 3 medical societies are urging its revival in this year's lame-duck session of Congress, when politics is expected to take a back seat.

The bill is the SGR Repeal and Medicare Provider Payment Modernization Act. Supported by organized medicine, the legislation would raise payment rates 0.5% through 2018 while gradually shifting Medicare compensation from fee-for-service to pay-for-performance. By shelving the SGR formula, it also would have averted a 23.7% Medicare pay cut set for April 1 that threatened to drive physicians out of the program.

Passage appeared possible in March, but the question of how to offset the cost of the bill — put at $138 billion over 10 years by the Congressional Budget Office (CBO) — eluded a bipartisan answer in the House. There, House Republicans added a decidedly partisan amendment that would pay for SGR repeal by delaying the individual mandate to obtain health coverage under the Affordable Care Act (ACA) for 5 years. The so-called "poison-pill" provision made the bill, approved by the House on March 14, a nonstarter in the Democrat-controlled Senate, which was giving identical legislation favorable consideration.

To avoid an April Fool's debacle, Congress voted to once again postpone the SGR-mandated pay cut, this time to April 1, 2015. Lawmakers have delayed similar rate reductions on a yearly basis going back to 2003.

Now the medical profession faces another SGR cliff and a Medicare pay cut of 20.9% (lower than expected spending on physician services helps explain the smaller cut). For their part, the Society of General Internal Medicine (SGIM), the American College of Physicians, and the American Academy of Family Physicians (AAFP) are urging Congress to resolve the Medicare payment crisis once and for all. On September 30, the societies held a Capitol Hill briefing in which they urged lawmakers to pass the SGR repeal bill from last March during the upcoming lame-duck session after the November 4 general election. The phrase "lame-duck" refers to lawmakers in these postelection sessions who will not be returning to Congress in 2015 either because they were voted out of office or because they had not sought reelection.

"The Election Is Off the Table"

The societies are putting their hopes in the lame-duck session because "the election is off the table," said briefing participant and AAFP President Reid Blackwelder, MD, in an interview with Medscape Medical News. "It creates the possibility of having a discussion without the political ramifications of something being held against you [in an election]."

Dr. Blackwelder speculates that several key supporters of the latest SGR repeal bill who are retiring, such as Rep. David Camp (R-MI) and Rep. Henry Waxman (D-CA), might push extra hard for passage during the lame-duck session for the sake of their legislative legacy. To do that, they must find a way to offset the cost of repeal that both parties in both chambers of Congress can stomach. Earlier this year, Camp offered the politically untenable "pay-for" that would have gutted the ACA. The lame-duck session "lessens the chance of a poison pill," said Dr. Blackwelder.

The new Congress that convenes in January is less likely to approve a comprehensive Medicare reimbursement bill that eliminates the SGR formula, he added. Some current backers will be gone, and newly elected members will need to come up to speed on the issue. In addition, the makeup and leadership of House and Senate committees will change, and dramatically so in the Senate if Republicans gain a majority there on November 4.

Yet another reason to act now, said Dr. Blackwelder, is the current "fire sale on the SGR." Two years ago, the CBO estimated that it would cost more than $300 billion to repeal the formula. Its latest estimate is down to $131 billion — again, attributable to lower than expected Medicare spending on physician services. There's always the chance, Dr. Blackwelder said, that a future CBO calculation could yield a higher number.

Fee-for-Service "Challenges the Rules of Common Sense"

To Dr. Blackwelder and the other medical-society leaders at the Capitol Hill briefing this week, the demise of the SGR formula marks just the beginning of Medicare payment reform. What's ultimately needed, they said, is a replacement for fee-for-service medicine.

SGIM President William Moran, MD, said in a news release that Medicare's fee-for-service structure "challenges the rules of common sense" by rewarding clinicians for each service provided, regardless of the patient's outcome. Furthermore, Medicare pays disproportionately higher rates for costly, technology-intensive services than for the management of patients with chronic illnesses.

"We're paying for more — and more expensive — medical procedures and less to help seniors learn how to properly manage their diabetes or keep their congestive heart failure in check," Dr. Moran said.

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