SGR Repeal Effort to Resume in House

A house subcommittee will have another chance next week to amend a draft proposal to kill the sustainable growth rate formula. Without a "doc fix" in place, physicians who treat Medicare patients will face a 24.4% cut in reimbursement rates in 2014.

The House Energy & Commerce Committee's Subcommittee on Health is expected to mark-up its draft proposal to repeal and replace the sustainable growth rate formula on July 22 Capital Hill sources have told HealthLeaders Media.

The proposal calls for the SGR to be repealed and replaced with what the committee describes as "an improved fee-for-service system" with quality measures developed by providers and the Department of Health and Human Services.

Providers will have "the option of leaving the fee-for-service system and opt instead for new ways of delivering care," and receiving reimbursements, including accountable care organizations, patient centered medical homes, and bundled payments.

This is the fourth iteration of the House proposal, which was first developed in February. The committee released this latest version as a 42-page discussion draft on June 28 and asked stakeholders to review and respond by July 9. A spokesperson for the committee declined to release any information about the number of responses received or their contents.

Without the so-called "doc fix" in place, physicians who treat Medicare patients will face a 24.4% cut in their reimbursement rates in 2014.

Rep. Fred Upton (R-MI), who chairs the E&C and is credited with putting together the proposal, has let it be known that he wants it to go before the entire E&C Committee before Congress takes its annual August recess.

Capital Hill insiders do not expect the process to go quite that smoothly.

For one thing, the Republican House hopes to draw some Democratic blood by holding votes on repealing the employer and individual mandate provisions of the Affordable Care Act before the August recess. In addition, the E&C proposal isn't the only SGR repeal and replace legislation in the House.

Rep. Allyson Schwartz (D-PA) has already raised concerns about the E&C proposal. Her spokesperson, Greg Vadala, says the proposal doesn't do enough to reward quality over fee-for-service volume because the alternative payment model with its quality incentives is the "exception rather than the rule."

Schwartz has her own bipartisan SGR bill co-written with Rep. Joe Heck (R-NV). HR 574 (Medicare Physician Payment Innovation Act of 2013) has 34 co-sponsors. The bill has been stuck in committee since February, but Schwartz is hopeful that her approach, which includes a modified FFS element as a fall-back option, will gain traction. The bill includes a five-year period of payment stability that is popular with physicians.

Her pitch is that "she has a plan, laid out in legislative language, for how to get this done," says Vadala. Rep. Schwartz, a member of the powerful House Ways and Means Committee, also wants to "make sure that the priorities in her bill are part of the discussion," says Vadala.

John Williams, an attorney who specializes in government and public policy for Hall, Render, Killian, Heath & Lyman, an Indianapolis-based healthcare law firm, wrote in an e-mail exchange, "I don't think there is any way the House passes a stand-alone bill under regular order that isn't completely paid for because rank and file Republicans won't vote for it."

He added that anything adopted at the mark-up, such as funding cuts to the Affordable Care Act, will be "complete non-starters in the Senate."

While there is some expectation that an SGR repeal-and-replace bill will likely hit the House floor, the outlook is less optimistic on the Senate side.

Despite several months of hearings and stakeholder input, Senate Finance Committee, has yet to produce any SGR legislation. While there is some thought that Sen. Max Baucus (D-MT), the Finance Committee chair, is preoccupied with getting tax reform passed, the lack of action probably reflects the reality of identifying offsets (pay for) that are acceptable to Congress and the White House.

"A long-term [SGR] fix will need a significant [dollar] offset," says Christopher Condeluci, an attorney with law firm Venable in Washington, D.C. and a former tax counsel for the Senate Finance Committee. In May the Congressional Budget Office scored the 10-year repeal cost at $138 billion, which is almost a bargain basement rate compared to the $234 billion price tag for its 2012 score.

There are only two ways to generate offsets—increase revenue or reduce government spending—and these days in Washington it seems impossible to develop a consensus around either one. Without a consensus "you aren't going to be able to enact a long-term SGR fix" says Condeluci even though everyone seems to agree that a long-term fix is preferred to the annual band-aid fixes.

Williams expects any congressional action to go down to the wire on Dec. 31, as it did last year. That could mean that physicians are in for another rocky ride this fall.

The SGR formula was put in place as part of the Balanced Budget Act of 1997 to help control Medicare spending. It soon became apparent that significant cuts in physician reimbursements would be required to help reduce spending. Since 2003 Congress has routinely declined to make those cuts.

For their part, physicians are losing patience with the process. "All of us can look at this and say we've been here before. It's almost getting to the point of ridiculous. How much more can we talk? How much more new information do we need?" states Brad Flansbaum, DO, a hospitalist at Lenox Hill Hospital in New York City, and a former board member for the Society of Hospital Medicine. Congress knows that the "longer [it] waits, the more it's going to cost. I just don't know how much longer [physicians] can face the patch. We've seen it all before. We know what needs to be done."