House OKs SGR Replacement Deal; Senate To Consider After Recess

The House on Thursday voted 392-37 to approve legislation (HR 2) that would permanently replace Medicare's sustainable growth rate formula, the New York Times reports (Steinhauer/Pear, New York Times, 3/26).

Background

House and Senate lawmakers last week introduced bipartisan, bicameral legislation to permanently replace the SGR. The package includes several other measures related to health spending, such as funding for community health centers, which serve low-income individuals in every state (California Healthline, 3/25).

The measure is largely the same as legislation (HR 4015, S 2000) introduced last year to replace the SGR. Among other provisions, HR 2 would:

• Provide a 0.5% annual raise through 2019 for providers who participate in Medicare before transitioning to an incentive-based payment system;
• Encourage providers to participate in alternative payment models focused on patient outcomes, with providers participating qualifying models receiving a 1% annual rate increase beginning in 2026;
• Extend the Children's Health Insurance Program funding for two years; and
• Provide $7 billion in funding over two years for community health centers, maintaining current funding levels that are set to expire on Oct. 1.

The measure overall 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.

Overall, the deal would add about $140 billion to the federal deficit over 10 years (California Healthline, 3/20).

Reaction

President Obama applauded the bipartisan deal, negotiated by House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.), saying, "This is how Congress is supposed to work" (New York Times, 3/26). Obama on Wednesday said he is ready to sign bipartisan legislation to permanently replace the SGR formula (American Health Line, 3/26).

Meanwhile, Boehner said the deal is evidence of what lawmakers "can accomplish when we're focused on finding common ground" (Hughes, Wall Street Journal, 3/26). He added, "This will be the first real entitlement reform that we've seen in nearly two decades. And that's a big win for the American people" (Howell, Washington Times, 3/26).

Separately, Marilyn Moon, a health economist and former Medicare trustee, said the deal will have wide-reaching implications if enacted. She noted, "If doctors respond to the incentives in this bill, they will have to change the way they do business. Now doctors get paid more if they do more. In the future, they will be paid more if they do it better -- and may be paid more for doing less" (New York Times, 3/26).

Pelosi also called the measure "transformative in how it rewards the value not the volume" of health care services.

Provider groups also applauded the House vote. Halee Fischer-Wright, president and CEO of the Medical Group Management Association, said in a statement that the House "has voted to remove the dark cloud of financial uncertainty over physician group practices."

Robert Wah, president of the American Medical Association, said the measure "supports innovative new delivery and payment models that will help improve care quality, health outcomes and lower costs," while "also assur[ing] access to care for children, low-income individuals and families by extending funds for [CHIP] and community health centers."

Senate Will Not Consider Measure Until After Recess

The House vote sends the bill to the Senate for consideration (Frank et al., Modern Healthcare, 3/26).

Both the House and Senate will need to approve an SGR replacement measure before Congress adjourns for recess and when the current "doc fix" expires at the end of March to avoid scheduled automatic payment cuts. Physicians face about a 21% reduction in Medicare reimbursement rates unless Congress acts by April 1 (California Healthline, 3/25).

However, Senate Republican and Democratic leaders said early today that they would not consider the measure until they return from recess on April 13. Senate Majority Leader Mitch McConnell (R-Ky.) said the delay would not affect providers because of the normal lag time in claims processing. He noted that the chamber will consider the bill "very quickly when we get back," adding, "I think there's every reason to believe it's going to pass the Senate by a very large majority" (Lawder, Reuters, 3/27).

Meanwhile, Senate Minority Leader Harry Reid (D-Nev.) expressed disappointment that the Senate would not consider the bill before adjourning for recess. He said, "I understand it's late, whatever day it is. We're willing to move forward, I'm disappointed that we may not [be] able to get it done tonight" (Carney, "Floor Action," The Hill, 3/27).

Still, some senators expressed caution about pushing the measure through too quickly. Sen. Jeff Sessions (R-Ala.) in a floor speech on Thursday said, "Why would we allow this to pass through so fast? Let's do a short-term fix again. But this time let's do a permanent fix, one that's responsible, one that's grown-up, one that's paid for, not just one that adds more debt to the credit card of America" (Demko, Modern Healthcare, 3/26).