2015 Congress: 3 Initiatives for Payers

In November, the Republican Party took control of both houses in Congress. The shift in political power could have a profound impact on payers, according to a diverse panel of healthcare experts.

Healthcare is one of the most regulated industries in the country, with a host of federal and state agencies overseeing all the major stakeholders.

In last fall's mid-term election, Republicans gained control of the Congress, seizing the Senate with a 54-46 edge over the Democrats and their duo of independent party allies. In the House, the GOP extended its voting margin over the Democrats, picking up 14 seats to post a 247-188 advantage.

As Republican leaders prepare to wield power at the Capitol, HealthLeaders Media polled a half-dozen healthcare experts, including representatives from payers, academia, and the business community. The panelists were asked to identify the top Congressional initiatives for healthcare payers to watch in 2015.

Three initiatives rose to the top:

• The quest to fix or replace Medicare's unpopular physician reimbursement mechanism, the Sustainable Growth Rate
• Patient Protection and Affordable Care Act repeal legislation
• Efforts to tinker with elements of the PPACA

The SGR mess

Congress has struggled to reform or repeal Medicare's SGR physician reimbursement formula for more than a decade.

Last February, frustration fueled a bipartisan coalition of lawmakers who cut an SGR repeal deal, the SGR Repeal and Medicare Provider Payment Modernization Act of 2014. "The Sustainable Growth Rate formula—the mechanism that ties physician payment updates to the relationship between overall fee schedule spending and growth in gross domestic product (GDP)—is fundamentally broken," members of the Senate Finance Committee, the House Ways and Means Committee, and the House Energy and Commerce Committee said in a joint statement.

William Kramer, executive director of health policy for the Pacific Business Group on Health, a purchasing group based in San Francisco, says legislation designed to resurrect last winter's SGR repeal deal is of utmost importance to payers and other sectors of the healthcare industry.

Fixing or replacing the SGR when it expires in March would be a key step toward creating a value-based healthcare system, he says. "The stakes are high. If we don't change the way physicians are paid, we will perpetuate a system in which the primary incentive is to increase volume, not quality. Although the bill isn't perfect, this is a crucial opportunity to continue the momentum toward value-based payment. If we get it right, Medicare physician payment reform will be a game changer; it will ripple out into the broader health system and improve quality and affordability for everyone."

Paul Clark, a legal analyst at Wolters Kluwer Law and Business, is pessimistic about progress and says the forces of action and inaction are set for yet another SGR battle in Congress.

"Congress has been unable to enact significant changes in physician reimbursement, so each year they pass a Band-Aid piece of legislation that averts significant cuts for a short period of time," Clark says. "So expect at least another short-term fix early in the 114th Congress that will mollify physicians for a few months, and more rhetoric from members of Congress about a long-term fix."

Another SGR patch would likely prompt Congresspeople to attempt piecemeal reforms to physician reimbursement in 2015, according to Harold Miller, president and CEO of advocacy group Center for Healthcare Quality and Payment Reform.

"If Congress decides to simply enact another temporary patch to the SGR this spring instead of a permanent repeal, separate legislation on physician payment reform will be needed," he says, noting that several factors have created momentum payment reform legislation in 2015, such as the bipartisan push to move away from fee-for-service physician reimbursement. "There will likely be two different kinds of legislation considered: first, legislation authorizing or requiring faster progress on alternative payment models for all types of physicians; and second, legislation requiring implementation of specific payment models for individual specialties."

PPACA repeal improbable

Despite the Republican Party's firm grip on the House and newly won Senate majority, the GOP appears far more likely to revise the PPACA than to repeal President Obama's prime domestic policy initiative.

Theda Skocpol, PhD, a Harvard University professor and director of the Scholars Strategy Network policy group, says PPACA foes face a harsh political reality. "Too many people have gained health insurance through this law," she says of Americans who have garnered health coverage through the new public exchanges or expansion of Medicaid. "Whatever changes are made, repeal remains nothing more than rhetoric."

Republicans are far short of the 67 votes that would be required to override a certain presidential veto of any PPACA repeal legislation, Skocpol says. "You can forget that."

Chipping away at the PPACA

Changes to the healthcare law are another matter. Republican lawmakers are likely to find enough Democrats to tinker with unpopular elements of the PPACA such as the tax on medical devices that helps fund the law, Skocpol says. "Some of these things will get through to Obama. You can chip away at this or that tax, then you're talking real money."

Michael Warfel, vice president of government affairs at Pittsburgh-based Highmark Inc., says the PPACA's health insurance tax is ripe for revision or repeal.

"The HIT is a tax on all fully insured health insurance policies offered by a carrier. The tax began as an $8 billion assessment on the industry in 2014. It is scheduled to grow exponentially, reaching $18 billion by 2024 and more in later years," he says. "Opposition to the tax is broad since those whose coverage it impacts—small businesses, seniors, and individuals without access to subsidized coverage—are the same groups already having a difficult time affording care. The push for repeal on Capitol Hill is being spearheaded by the small business community."

Washington wheels set to turn slowly

Cindy Morrison, executive vice president of marketing and public policy at Sioux Falls, SD-based Sanford Health, says the pace of 2015 healthcare-related legislation will be set by immutable forces in Congress: the calendar, politics, and taxpayer dollars. The deployment of these forces indicates the pace will be sluggish, she says: "There's going to be a wait-and-see approach."

The impending SGR showdown looms large on the legislative calendar. "It will have to be addressed," she says. "That's the first thing out of the chute in March."

On the political front, Congresspeople are likely to move cautiously on healthcare legislation until this summer's U.S. Supreme Court decision on whether to allow subsidies on federally operated insurance exchanges, Morrison says. "If you're a smart politician, you're not going to make a move until the Supreme Court decision in June,"

The financing of healthcare, particularly for programs linked to the PPACA, also points to a slow pace for healthcare-related legislation in 2015, according to Morrison. Attempts to repeal any of the taxes that finance the PPACA could meet the same end as last winter's SGR repeal deal, she says. "It's fine if you're going to repeal a tax, but you better have a pay-for."