Opportunity for Permanent SGR Fix Receding

CongressOn March 6, Republicans attempted to combine legislation that repeals the Medicare SGR formula with a separate bill that would delay the ACA mandate requiring individuals to purchase health insurance.  Their logic was that the money saved by delaying the individual mandate (by not paying subsidies to those purchasing health insurance) would pay for the repeal of the SGR.  However, delaying the individual insurance mandate is very unlikely to pass the Democrat-controlled Senate.

With the Congress adjourning for a week long recess on March 17, there is little time to come up with a payment plan for replacing the SGR.  This year is the first time both parties attempted to construct legislation that would replace the SGR.  The focus was on implementing new pay-for-performance payment initiatives.  The House Ways and Means Committee, House Energy and Commerce Committee, and Senate Finance Committee leadership introduced a bi-partisan bill to repeal and replace the Medicare Sustainable Growth Rate (SGR) formula in February.  While there is substantial agreement on the need to repeal the SGR formula, the problem continues to be finding agreement on how to pay for it.

For a permanent fix Congress would need to come up with a plan before March 31st that identifies $120 – $130 billion in savings to cover the SGR repeal.  There is no momentum currently toward making this happen.  More than likely Congress will propose a nine-month SGR patch in order to give members additional time to find the necessary savings for a permanent repeal of the SGR. The patch legislation is expected to be introduced during the week of March 24.  The estimated price-tag for the nine month patch is $15 billion of which $6 billion may come from disproportionate share hospital (DSH) payments.  The remaining $9 billion in savings is yet to be identified.

The longest Congress could delay making a decision is two weeks after the March 31 deadline, as CMS could hold payment to providers for that long for medical services performed as of April 1.  As in past years, it is doubtful that Congress would let the deadline pass resulting in a 24% Medicare physician payment rate reduction for the remainder of 2014.

 

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