Senate Faces Deadline on SGR; CMS Says Bill Not a Permanent Fix

On Monday, the Senate returns from recess with a short window to pass legislation (HR 2) to replace Medicare's sustainable growth rate formula before CMS begins processing a 21% cut to physician reimbursements, Modern Healthcare reports (Demko, Modern Healthcare, 4/11).

Background

The House last month voted 392-37 to approve HR 2 (California Healthline, 4/2). The measure would provide a 0.5% annual raise through 2019 for providers who participate in Medicare before transitioning to an incentive-based payment system designed to encourage participation in alternative payment models (Demko, Modern Healthcare, 4/10). The bill includes several other measures related to health spending, such as funding for community health centers, which serve low-income individuals in every state.

Although a 21% cut to physician reimbursements under the SGR took effect April 1, CMS earlier this month said that, barring congressional action, it would not begin processing the payment cuts until April 15. A CMS official said, "Should Congress act subsequently, CMS will reprocess those claims paid at the lower payment rate to reflect the new payment rates." However, such a move could increase administrative costs.

Overall, the SGR replacement measure would cost $213 billion. The deal would offset about $70 billion of the projected costs. Roughly half of the possible deal's offsets would come from cuts to hospitals, insurers and acute-care providers. The other half of the offsets would come from cuts to Medicare beneficiaries, such as additional means testing for high-income beneficiaries (California Healthline, 4/2).

CMS: SGR Replacement Not a Permanent Solution

In related news, Medicare beneficiaries' access to care could "be severely compromised" in the future even if HR 2 passes, according to a report released last week by CMS' Office of the Actuary, Modern Healthcare reports.

The report found that:

• Medicare payment rates for physicians and other eligible professionals would be lower in 2049 with the new payment system than under the SGR formula; and
• Medicare payments starting after 2024 would begin to fall behind the project rates under current law and would not keep up with inflation (Modern Healthcare, 4/10).

CMS Chief Actuary Paul Spitalnic wrote in the report that Congress would need to take further action in later years to maintain beneficiaries' access to care, even if HR 2 passes. He wrote that the new payment rates under the legislation "would be adequate for many years" but could fall short during years with high inflation (Ferris, The Hill, 4/10).

According to Modern Healthcare, the report could "make it more difficult" for the Senate to pass the SGR replacement measure (Modern Healthcare, 4/10).

Reaction

Paul Winfree, director of the Heritage Foundation's economic policy center, said on Friday that the report showed that "in fact, the House measure is not a permanent fix to the broken [SGR]." He added that the measure would require "another series of patchwork legislation just nine years from now" (The Hill, 4/10).

Meanwhile, American Medical Association President Robert Wah in a statement called the report's findings as "illogical, flawed and dangerous for patient access to high quality health care." He said the report was based on the assumption that the current SGR formula would result in payment rate increases, which he said was "simply unbelievable given our long history with the flawed SGR formula." He added, "Fluctuations in just two of the factors that affect SGR calculations -- GDP growth and Medicare spending growth -- are far too unpredictable to make this a reasonable assumption" (Haberkorn, Politico Pro, 4/10).

Lawmakers' Objections Could Delay Bill

In other related news, objections to the bill raised by several conservative lawmakers are "raising doubts" about whether HR 2 will quickly pass in the Senate, Reuters reports.

According to Reuters, Senate rules allow lawmakers the power to delay legislation, even if a majority of the chamber supports the measure. Further, any Senate amendments mean the bill would need to return to the House for consideration (Cornwell, Reuters, 4/10).

Some Senate lawmakers have discussed several proposals to amend the House-passed SGR replacement measure.

For example, Sen. Mike Lee (R-Utah) is expected to propose an amendment that would require lawmakers to fully fund the replacement measure (Reuters, 4/10).

Nonetheless, the chances any amendments would pass appear to be "small," according to the AP/Sacramento Bee (Fram, AP/Sacramento Bee, 4/11).