Agreement Between Lawmakers, Stakeholders On ‘Doc Fix’ Offsets Remains Elusive

Providers and lawmakers agreed that the sustainable growth rate (SGR) formula for determining Medicare physicians’ reimbursement needs to be permanently fixed, but during a Jan. 22hearing, they offered no new ideas on how to pay for it.

Representatives from hospitals, physicians and nursing groups told members of the House Energy and Commerce health subcommittee they were confident a bipartisan agreement could be reached. Permanently replacing the SGR would cost over $140 billion, which witnesses said could be paid for by structural improvements to Medicare, such as increased competitive bidding and combining Parts A and B into a single deductible.

Most witnesses told lawmakers they were supportive of the proposals in the bill that passed the House in 2014, the proposed SGR Repeal and Medicare Provider Payment Modernization Act (H.R. 4015). Republicans in 2014 proposed delaying the Affordable Care Act’s individual mandate to pay for the bill, and it failed to advance in the Democratic-controlled Senate. Lawmakers during the Jan. 22 hearing didn’t mention any ACA cuts or delays as potential offsets.

The hearing was the second in two days, with the goal of bringing a “fiscally responsible” bill to the president’s desk before the current patch expires at the end of March. If Congress take no action, payments to physicians would be cut by 21 percent.

After disagreements during the Jan. 21 hearing, lawmakers wouldn’t commit to which offsets they would be willing to consider to pay the $144 billion price tag of a permanent SGR fix. In fact, they wouldn’t commit to whether they would even consider offsets. Rep. Brett Guthrie (R-Ky.), the subcommittee’s vice chairman, said all options were still under consideration.

During the Jan. 21 hearing, Democrats said a fix didn’t need to be paid for, but if offsets were necessary to pass both the House and Senate, contingency war funding should be used (14 HCDR, 1/22/15).

Medicare Reforms

Barbara McAneny, chair of the American Medical Association’s Board of Trustees, said H.R. 4015 “is a detailed, thoughtful, and workable solution. It represents a major improvement over current law, and it is widely supported by physician specialty organizations.”

McAneny said the bill offers “meaningful Medicare reform” and includes important proposals to reward quality care and move the delivery system away from fee-for-service, which is why lawmakers should move forward on the bill.

Richard Umbdenstock, president and chief executive officer of the American Hospital Association, said he believes an SGR fix needs to be offset, but that money shouldn’t come from hospitals.

“Congress needs to move away from cutting funding for services provided by other caregivers to pay for the physician fix,” Umbdenstock said. “Offsets should not come from other health-care providers, including hospitals.”

Rep. Frank Pallone Jr. (D-N.J.), ranking member of the full committee, repeated his concern that SGR reform will be tied up with other “poison pills” that cut money from providers and make drastic changes to Medicare. He said any offsets shouldn’t come from denying beneficiaries access to care.

Eric Schneidewind, president-elect of AARP, said Congress doesn’t need to offset a permanent repeal.

“In light of current and future savings in the Medicare program, Congress would be justified in not fully offsetting the costs of a permanent repeal at this time. Other bills are being discussed without offsets. SGR repeal is of equal or greater necessity, and should not be delayed due to budget rules,” Schneidewind said.

However, Schneidewind said savings for an SGR fix could come from prescription drug reforms. For example, he said Medicare Part D drug rebates, reducing the exclusivity period for biologic drugs and enabling the health and human services secretary to negotiate drug prices would save at least $150 billion—enough to roughly offset the cost of an SGR fix.

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