Practice Economics

FAQ: What’s in the House proposal to fix the SGR?




It’s make-or-break time for a Medicare “doc fix” replacement.

The House is likely to vote the week of March 23 on a proposal to scrap Medicare’s troubled physician payment formula, just days before a March 31 deadline when doctors who treat Medicare patients will see a 21% payment cut. Senate action could come this week as well, but probably not until the chamber completes a lengthy series of votes on the GOP’s fiscal 2016 budget package.

Alicia Ault/Frontline Medical News

After negotiating behind closed doors for more than a week, Republican and Democratic leaders of two key House committees that handle Medicare unveiled details of the package late Friday. According to a summary of the deal, the current system would be scrapped and replaced with payment increases for doctors for the next 5 years as Medicare transitions to a new system focused “on quality, value and accountability.”

There’s enough in the wide-ranging deal for both sides to love or hate.

Senate Democrats have pressed to add to the proposal 4 years of funding for an unrelated program, the Children’s Health Insurance Program (CHIP). The House package extends CHIP for 2 years. In a statement Saturday, Senate Finance Democrats said they were “united by the necessity of extending CHIP funding for another 4 years.”

Their statement also signaled other potential problems for the package in the Senate, including concerns about asking Medicare beneficiaries to pay for more of their medical care, the impact of the package on women’s health services, and cuts to Medicare providers.

Still, some Democratic allies said the CHIP disagreement should not undermine the proposal. Shortly after the package was unveiled Friday, Ron Pollack, executive director of the consumers group Families USA, said in a statement that “while we would have preferred a 4-year extension, the House bill has our full support.”

Some GOP conservatives and Democrats will balk that the package isn’t fully paid for, with policy changes governing Medicare beneficiaries and providers paying for only about $70 billion of the approximately $200 billion package.

For doctors, the package offers an end to a familiar but frustrating rite. Lawmakers have invariably deferred the cuts prescribed by a 1997 reimbursement formula, which everyone agrees is broken beyond repair. But the deferrals have always been temporary because Congress has not agreed to offsetting cuts to pay for a permanent fix. In 2010, Congress delayed scheduled cuts five times. In a statement Sunday, the American Medical Association urged Congress “to seize the moment” to enact the changes.

Here are some answers to frequently asked questions about the proposal and the congressional ritual known as the doc fix.

Q: What are the options that Congress is looking at?

The House package would scrap the Sustainable Growth Rate (SGR) formula and give doctors a 0.5% bump for each of the next 5 years as Medicare transitions to a payment system designed to reward physicians based on the quality of care provided, rather than the quantity of procedures performed, as the current payment formula does.

The measure, which builds upon last year’s legislation from the House Energy and Commerce and Ways and Means Committees and the Senate Finance Committee, would encourage better care coordination and chronic care management, ideas that experts have said are needed in the Medicare program. It would give a 5% payment bonus to providers who receive a “significant portion” of their revenue from an “alternative payment model” or patient-centered medical home. It would also allow broader use of Medicare data for “transparency and quality improvement” purposes.

“The SGR has generated repeated crises for nearly 2 decades,” Energy and Commerce Committee Chairman Fred Upton (R-Mich.), one of the bill’s drafters, said in a statement. “We have a historic opportunity to finally move to a system that promotes quality over quantity and begins the important work of addressing Medicare’s structural issues.”

The package, which House Speaker John Boehner (R-Ohio) and Minority Leader Nancy Pelosi (D-Calif.) began negotiating weeks ago, also includes an additional $7.2 billion for community health centers over the next 2 years. NARAL Pro-Choice America denounced the deal because the health center funding would be subject to the Hyde Amendment, a common legislative provision that says federal money can be used for abortions only when a pregnancy is the result of rape, incest, or to save the life of the mother.

In a letter to Democratic colleagues, Rep. Pelosi said the funding would occur “under the same terms that Members have previously supported and voted on almost every year since 1979.” In a statement, the National Association of Community Health Centers said the proposal “represents no change in current policy for Health Centers, and would not change anything about how Health Centers operate today.”


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