Obama Signs SGR Replacement Bill, Halts 21% Physician Payment Cut
On Thursday, President Obama signed legislation (HR 2) to permanently replace Medicare's sustainable growth rate formula, the AP/San Francisco Chronicle reports (Kuhnhenn/Fram, AP/San Francisco Chronicle, 4/16).
The Senate on Tuesday voted 92-8 in favor of the House-approved measure, which calls for providing a 0.5% annual payment increase through 2019 for providers who participate in Medicare and then transitioning to an incentive-based payment system designed to encourage participation in alternative payment models. 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. In addition, the bill includes a two-year extension of funding for the Children's Health Insurance Program. Further, the bill would delay fully enforcing CMS' so-called "two-midnight" rule for two months.
Overall, the SGR replacement measure would cost about $213 billion over 10 years. It would offset about $70 billion of the projected costs and add about $140 billion to the federal deficit over 10 years, according to estimates. The offsets include almost $35 billion in increased Medicare premiums for higher-income beneficiaries, which would not take effect until 2018. In addition, the bill includes payments cuts to home health agencies, hospitals and nursing homes (California Healthline, 4/15).
Obama Applauds Bipartisanship, Bill's Quality Provisions
While signing the bill in the White House Rose Garden, Obama applauded lawmakers' "bipartisan effort" to pass the measure and ensure "doctors' payments didn't get cut off" (Mason, Reuters, 4/16). Further, Obama said the legislation will improve Medicare "because it starts encouraging payments based on quality, not the number of tests that are provided or the number of procedures that are applied but whether or not people actually start feeling better" (AP/San Francisco Chronicle, 4/16).
Legislation Takes Effect
The legislation took effect immediately upon the signing (Reuters, 4/16). CMS said Thursday that it had already been making most physician payments at the full rate ahead of the president's signature. In a written statement to providers, CMS noted that just "a small volume of claims" are being processed at the lower payment levels, but those payments would be reprocessed later at the full rate (AP/San Francisco Chronicle, 4/16).
Lawmakers Looking to Future Battles
Meanwhile, lawmakers already are looking toward future battles over funding for health programs that were not completely addressed in the SGR replacement bill, CQ News reports.
For example, HR 2 did not include a permanent repeal of caps on Medicare spending for certain therapy services (Attias, CQ News, 4/16).
Another issue lawmakers already are considering is future extensions of CHIP funding. While HR 2 extended CHIP funding for an additional two years, Democrats favored a four-year extension. Bruce Lesley, president of the First Focus Campaign for Children, said the group will "redouble [its] efforts to extend CHIP again in 2017."
Meanwhile, two rejected amendments offered by Sen. Patty Murray (D-Wash.) hinted at future battles over funding for primary care physicians. One amendment sought to extend an expired Affordable Care Act provision that provided elevated reimbursement rates for PCPs participating in Medicaid, while the other would have extended a funding program for community health centers that expires in 2017.
Further, there soon could be disagreements over other Medicare and health-related issues, including:
- Extra funding for hospitals with low discharge volumes; and
- Funding for rural hospitals that have a large proportion of Medicare beneficiaries (CQ News, 4/16).