According to several Congressional leaders, preventing a 21% cut in Medicare Physician Fee Schedule payments in 2015 under the flawed Sustainable Growth Rate (SGR) formula remains the top healthcare priority for Congress this year. The latest SGR cut is scheduled to take effect when the current short-term patch expires at midnight on March 31st.
If Congress fails to act on either a short-term or long-term fix by March 31st, physicians will be subject to a 21% cut in their Medicare Physician Fee Schedule payments.
Recall, last year Congress had, for the first time, an agreeable bipartisan, bicameral legislative fix to permanently replace the SGR with a new payment system built on value based care models. Unfortunately, Congress was unable to come with an equally agreeable bipartisan plan to offset the $120 billion (now estimated at $144 billion) cost of this fix. Therefore, that proposal was never enacted despite broad support. Instead, Congress was forced to pass another one year patch in order to prevent the scheduled cuts from taking place.
At the beginning of this year, legislators from both chambers in key committee positions with jurisdiction over health policies outlined their priorities for the year. Fixing SGR, ideally on a permanent basis, remains the top priority for these legislators.
House Budget Committee Chairman Rep. Tom Price (R-GA), a physician himself, expressed optimism that a permanent fix can be passed before the March 31st deadline. So too did Rep. Kevin Brady (R-TX), Chairman of the House Ways and Means Health Subcommittee. Senator Hatch, Chairman of the Senate Finance Committee considers this “must pass” legislation.
The optimism expressed by these leaders that a permanent SGR fix was within reach was tempered by a two-day SGR hearing held earlier this month by the House Energy and Commerce (E&C) Committee. The takeaway from those hearings: Congress is no closer to finding a way to offset the cost of a plan than it was last year.
During the E & C hearings, various proposals representing ideas from hospitals, physicians, insurers, pharmaceutical companies and consumers were put forward. Not surprisingly, everyone’s ideas for how to pay for the SGR fix involved cutting payments to someone else.
Consumer groups want Congress to target pharmaceutical companies. Hospitals want Congress to up beneficiary payments, physicians want Congress to cut hospital and managed care payments. Some groups (including some Members of Congress) advocated for just adding the cost of the SGR fix to the national debt.
Reducing or controlling Federal spending is a priority for the newly minted Republican controlled Congress so as long as they are in control, any plan to replace the SGR will need to have at least some offsetting savings elsewhere in the Medicare program. Possible options could include raising the Medicare eligibility age (similar to what is already in place for Social Security), combining Medicare Parts A and B into a single deductible, limiting first-dollar cost-sharing on Medigap coverage plans, promoting greater use of “bundled” payments and finding savings elsewhere in the Federal budget to name just a few of the ideas being floated.
Given the relatively large class of Freshmen Members of Congress and the relatively short time to come up with a permanent fix by March 31st it would not be surprising if Congress adopted another short-term (6 – 9 months) SGR fix.
Again, Congress has until midnight on March 31st to prevent these cuts. Congress is expected to use all of this time to figure out how they will do so. It is highly unlikely that Congress does nothing and allows these cuts to take effect.
Thanks to Bill Finerfrock, Matt Reiter, Taylor Miller, Rohan Parekh and Carolyn Bounds for contributing this article.