Bipartisan Teasing for a Permanent SGR Fix

April Fools Day is almost here. That’s the day a mandated 21% cut to fees paid to physicians by Medicare is mandated by the sustainable growth rate (SGR). Congress has not acted. While commonly called the “doc-fix, ” it’s really a Medicare “beneficiary-fix.” Cutting money to pay for senior health services will hurt seniors, not physicians who can stop seeing Medicare patients or go to work for health systems.

Congress got teasingly close to a permanent fix to the much maligned formula last year, but ultimately failed.

This year, the news out of Washington, D.C. is that Republican House Speaker John Boehner and Democrat Minority Leader Nancy Pelosi have agreed on a deal to permanently replace the formula that mandates the cut to physician fees. A vote on the House floor is expected before Congress goes home for a two week spring break.

Who Pays?

Reports are that while agreeing in principle and price for a permanent fix, there is no agreement on how to pay for it or agreement with the Senate on linking the fix to an extension of the Children’s Health Insurance Program (CHIP). All 12 Democratic senators on the Senate Finance Committee have already gone on record suggesting they will oppose the House plan unless there is a four year CHIP extension. House Republicans are only agreeing to a two-year extension.

The permanent fix would cost about $210 billion over a decade. Of that amount, about $35 billion would be offset by raising the amount that upper-income seniors pay for their care under the program. A similar sum would come from changes in reimbursements to a variety of providers such as hospitals.

That leaves about $140 billion of the bill’s cost uncovered, which would add to the federal deficit. The latest report from AP on March 24 said Republican House staffers say Republicans want to pay for the SGR fix by cutting payments to Medicaid. Medicaid pays for healthcare services for the poor.

Whose Ox Gets Gored?

AARP, the senior citizens’ lobby, said the package “is not a balanced deal for older Americans.” With most of the measure financed with deeper federal deficits, the conservative Club for Growth urged lawmakers to vote “no” because it “falls woefully short” of being paid for. Voicing support was the American Medical Association, which said it was time for Congress “to seize the moment and finally put in place reforms” that would end the constant threatened cuts and strengthen Medicare.

There have been no publicly available documents to show exactly how the SGR fix will be financed. However, details of a proposed post-SGR payment system are included in the 158 page bill.

New Payment System Proposed

Only five pages of the bill are devoted the cost portion of the proposed law. The rest deals with how physicians will be paid.

At the heart of the system is the shift from a fee-for-service system to a pay-for-performance methodology. Congress would establish an “incentive payment system” to reward doctors who receive high performance scores from the government. Scores would be based on factors like the ability to keep patients healthy while controlling costs. Medicare would increase physician payments by 0.5% annually for five years while transitioning to the new system

According to Bob Doherty, writing on a recent www.kevinmd.com blog, the bill includes:

• Payment incentives for physicians who are able to demonstrate that they have made changes in their practices to benefit patients, like becoming patient-centered medical homes (PCMH), a model that has been shown to improve quality and patient satisfaction and lower costs.
• Payment incentives for physicians who achieve better clinical outcomes, for using health information technology effectively, and for delivering care more effectively and efficiently without sacrificing quality.
• Harmonizing and prioritizing measures to reduce the burden of reporting on physicians (accomplished by consolidating three existing Medicare reporting programs, each with their own measures, deadlines, penalties and incentives, into a single new merit-based incentive program).
• A new option for physicians to earn even higher Medicare payments for participating in alternative payment models (APM), like accountable care organizations and advanced PCMHs, and for the medical profession to propose new models.
• More dedicated federal funding to develop good measures of quality, patient satisfaction and cost.
• And a new, federally funded program to help smaller practices.

Herding Cats

The big test will probably not be whether Democrats will filibuster a deal they don’t like or the President vetoes the measure, but whether Speaker Boehner can deliver his Republican votes. He’s on very thin ground with many members of his caucus for negotiating with Democrats and allowing any increase in the budget deficit.

Boehner said on March 24 that prospects “were good” for passage after he and Pelosi introduced their bipartisan bill.

If Congress doesn’t strike a deal before April 1, physicians and seniors will have to wait until lawmakers return from their spring break.