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Senate Passes SGR Fix, Obama Likely to Sign

 |  By John Commins  
   April 01, 2014

The vote marks the 17th time that Congress has provided a short-term fix for the formula that sets Medicare pay rates for physicians. Included in the bill are two controversial provisions to delay implementation of the ICD-10 medical coding set and the so-called two-midnights rule.

On a bipartisan 64-35 vote, the Senate on Monday evening easily passed an 11th-hour bill to delay by one year a 24% cut in Medicare reimbursements for physicians that would have kicked in at midnight if the Sustainable Growth Rate funding scheme had been allowed to expire.

Monday's vote marks the 17th time that Congress has provided a short-term fix for the SGR since it was enacted in 1997. The controversial bill to extend the patch, which was make public only last week, sparked brief but fierce criticism before the Senate vote.

Sen. Tom Coburn, (R-OK), a physician, scolded his colleagues for their support of the Protecting Access to Medicare Act of 2014 (H.R.4302), which he said "totally ignored" the legislative process.

"The bill we have on the floor is one of the reasons why I am leaving Congress at the end of this year, because here's why the American people are disgusted with us. We are going to put off until tomorrow what we should be doing today," Coburn said at the start of a sharp and lengthy critique on the Senate floor.

"Voting for this bill doesn't fix anything except a little heat in the kitchen, and when we come back the next time the heat is going to be hotter, and hotter, and hotter," he said. "This bill is a cowardly response to the real problem that we have. It is time we stopped being cowards."

Senate Majority Leader Harry Reid, (D-NV), said the last-minute stop-gap was needed because "unfortunately the parties could not come together on what a permanent fix would be. We need to restore sanity to the Medicare system."

The bill now heads to President Obama's desk. The White House and the Department of Health and Human Services have not issued any statements about the bill.

Stuck inside the 121-page bill are two other controversial and costly provisions to delay by one year both the implementation of the ICD-10 medical coding set and the so-called two-midnights rule. With little fanfare and no speeches, H.R.4302 passed the House on Thursday in just 25 seconds during a hastily convened voice vote. There was no debate and there is no record of how the votes were cast.

More Uncertainty for Physicians
The Senate vote came with little suspense, the outcome already predicted. Passage of the bill, however, prompted another frustrated rebuke from American Medical Association President Ardis Dee Hoven, MD, who had made a permanent fix to the SGR a top priority in this session.

"This bill perpetuates an environment of uncertainty for physicians, making it harder for them to implement new innovative systems to better coordinate care and improve quality of care for patients," Hoven said in a statement.

"Remarkable progress was made this past year in reaching a bipartisan, bicameral agreement on policy to repeal the SGR, and the AMA encourages Congress to continue its work and resolve outstanding issues. On behalf of Medicare patients and physicians across the country, it is critical that we achieve permanent Medicare physician payment reform. We will continue our efforts to secure a permanent SGR repeal this year."

Just before Monday's vote Senate Republicans rejected a proposal by Finance Committee Chairman Ron Wyden, (D-OR), to create a "permanent fix" for the SGR by paying for the $138 billion hole it would create in the budget with Overseas Contingency Operations funds.

"When the SGR isn't met, Congress says 'That's OK! We will just apply a patch and punt.' Patch it up and let that SGR limp along just as it has year after year after year," Wyden said on the floor. "The cost of the patches now resembles the cost of the full repeal."

The temporary fix has been estimated to cost about $20 billion, although the Congressional Budget Office has yet to score it.

Safety Net Hospitals Respond
The AMA's stance notwithstanding, some other hospitals associations have quietly cheered the bill, which delays implementation of the so-called two-midnights rule, suspends recovery audits until March 31, 2015, and preserves disproportionate share payments for safety-net hospitals.


Two-Midnights Rule Spells Grim Financial Forecast for Hospitals


"We are pleased Congress wisely chose to put off damaging cuts to Medicaid disproportionate share hospital payments another year," Bruce Siegel, MD, president/CEO of America's Essential Hospitals, said in prepared remarks. "This will afford needed time to revisit the cuts in light of Medicaid coverage still short of the full expansion envisioned under the ACA."

"We're also glad to see delayed enforcement of Medicare's two-midnight rule. It's critical we get this policy right so that we don't inadvertently destabilize hospitals that care for the vulnerable."

ICD-10 Stunner
The delay of the ICD-10 implementation until Oct. 1, 2015, which was only made public less than one day before the House vote, stunned stakeholders in the healthcare IT sector.

"This pause in momentum discredits the significant work our industry has spent training staff, conducting testing, and converting systems; not to mention the hold on improving care quality and accuracy, advancing clinical reporting and research, and patient safety outcomes," said Russell P. Branzell, president and CEO of the College of Healthcare Information Management Executives.

"Assuming Presidential signature on the legislation, CMS must now provide new guidance to the industry on what the delay means for providers, vendors, clearinghouses and other concerned parties. The delay leaves numerous unanswered questions from testing, training and revamping the agency's education resources, such as the CMS eHealth University, designed to help providers understand, implement, and successfully participate in the conversion process."

Lynne Thomas Gordon, CEO of the American Health Information Management Association, said the transition to ICD-10 "remains inevitable" and that her organization would "seek immediate clarification on a number of technical issues such as the exact length of the delay."

The original compliance date for ICD-10 was Oct. 1, 2013, but that date was pushed back for a year when provider groups complained that they weren't ready.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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