SGR Repeal Bills Introduced in House, Senate

March 19, 2015

As expected, a bipartisan coalition in the House and Senate today introduced identical bills that repeal Medicare's notorious formula for setting physician pay and, in the process, averts a 21% rate reduction scheduled for April 1.

The legislation also would raise physician pay by 0.5% in the second half of 2015 and then each year from 2016 through 2019 while shifting Medicare reimbursement from fee-for-service to pay- for-performance. Medicare's incentive programs for electronic health records, quality reporting, and the so-called value-based modifier would be merged to reduce their administrative burden on physician practices.

Crafted with the blessing of House Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA), the measure represents the first step of a two-step process, according to healthcare industry lobbyists interviewed by Medscape Medical News. Later this week or early next week, the House is expected to amend the legislation to extend the Children's Health Insurance Program (CHIP) for 2 more years as well as several Medicare and Medicaid policies that boost reimbursement for miscellaneous providers. These include ambulance services and rural hospitals, according to Kaiser Health News. To top it off, the amendment will specify how much of the package's $200-billion-odd cost will be offset by spending cuts elsewhere and, most importantly, what those cuts are.

Previous attempts to repeal Medicare's sustainable growth rate (SGR) formula have garnered bipartisan support only to disintegrate after lawmakers couldn't agree on how to make the measures budget-neutral in the current era of fiscal prudence. That happened when an earlier version of today's bill died in Congress last year over the issue of so-called pay-fors.

Now GOP leaders in the House and Senate appear to be discarding the imperative to offset the cost of the SGR repeal, put at roughly $137 billion, calling that an exercise in budget gimmickry. That's because Congress has no intention of ever allowing a massive, SGR-mandated rate cut to occur, lest physicians desert the program en masse and leave seniors in a lurch. Proof? Lawmakers have postponed such cuts 17 times since 2003, causing them to accumulate into the 21% behemoth facing physicians on April 1.

However, GOP leaders seem intent on finding pay-fors when it comes to boosting the pay of physicians and other providers as well as extending the life of CHIP, which will otherwise expire on September 30. Such pay-fors may include higher cost sharing for Medicare beneficiaries and reduced reimbursement for hospitals and other select providers.

The new approach to the Medicare reimbursement crisis picked up an important endorsement earlier this week. "Far better to end this cycle of fiscal deception and replace the SGR with more honest budgeting," the Wall Street Journal stated in an editorial.

Tea Party Republicans in the House have called for a complete offset of the final bill's cost, but Boehner won't need their votes if House Democrats give him the majority he needs for passage. The bipartisan spirit could extend into the Senate, although some Democrats there already are demanding that the bill extend CHIP for 4 more years instead of 2.

Sponsors of the legislation include Rep. Michael Burgess, MD (R-TX); Sen. Orrin Hatch (R-UT), chair of the Senate Finance Committee; Rep. Fred Upton, (R-MI), chair of the House Energy and Commerce Committee; Rep. Frank Pallone Jr. (D-NJ), that committee's ranking Democrat; and Rep. Sander Levin (D-MI), the ranking Democrat on the House Ways and Means Committee.

More Than 750 Medical Societies Told Boehner to Repeal the SGR

Organized medicine was quick to applaud today's introduction of the SGR repeal bill. David Fleming, MD, president of the American College of Physicians (ACP), said in a news release that the bill "achieves ACP's top priorities for physician payment reform."

Robert Wergin, MD, president of the American Academy of Family Physicians (AAFP), also was pleased. "By passing this bill, lawmakers will stabilize Medicare, address the dual challenges of improved care and lower cost, and bring peace of mind to their elderly and disabled constituents," said Dr Wergin said in a news release.

The ACP and AAFP were two of more than 750 medical societies that urged Boehner in a letter earlier this week to repeal the SGR before April 1.

As usual, the roll call included other national groups, such as the American Medical Association and state medical associations. This time around, however, organized medicine mustered state chapters of specialty groups ranging from the California Urological Association to the Florida Radiological Society. Swelling the list further were local societies, such as the Brooklyn Psychiatric Society and the Phoenix Society of Gastroenterology.

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