Bipartisan SGR Bill Unveiled in House

The bill also delays until Sept. 30 changes in the two-midnight rule on inpatient billing that were set to take effect at the end of this month.

The House on Tuesday unveiled a bipartisan proposal to permanently fix the Sustainable Growth Rate funding formula and transition Medicare toward value-based payments.

"This package is the best opportunity to turn the page on years of short-term fixes so that we can finally make the reforms we need to strengthen Medicare for our seniors," Ways and Means Committee Chairman Paul Ryan, (R-WI), said in remarks accompanying the bill.

"This is real patient-centered reform—done in a bipartisan way—and I urge all of my colleagues to support it."

The much maligned SGR is a budget cap put in place by Congress in 1997 to control Medicare cost growth. It never worked, but rather than permanently fix the problem Congress has instead spent $150 billion in 17 short-term fixes since 2003. The most recent patch is scheduled to expire on March 21, which would leave physicians with a 21% cut in Medicare payments.

This latest permanent fix proposal builds upon HR1470, which earlier this month garnered support in the House Energy & Commerce and Ways & Means Committees, and by the Senate Finance Committee. According to a "working framework" released by the House Energy & Commerce Committee, the bill would:

• Repeal SGR and replace it with HR1470, a bipartisan, bicameral agreement that also transitions Medicare to a value-based payment scheme.
• Provide 0.5% annual increases to Medicare payments for the next five years to provide a period of stability.
• Delay disproportionate share payment cuts to safety net hospitals until 2018 and extend the DSH policy through 2025.
• Delay until Sept. 30 changes in the two-midnight rule on inpatient billing that were set to take effect at the end of this month.
• Fully fund the Children's Health Insurance program through Sept. 30, 2017.
• Preserve all extenders included in 2014's temporary SGR patch, including addition to funding for Community Health Centers through 2017.
• Provide a 5% bonus to providers who receive a significant portion of their revenue from an alternative payment model or patient centered medical home.
• Permanently extend Medicare's Qualifying Individual program for low-income seniors, and the Transitional Medical Assistance program that helps families on Medicaid keep their coverage as they transition from welfare to work.

Repeal of the SGR and other provisions in the bill are expected to cost anywhere from $175 billion to $200 billion over 10 years and it's not clear where all of that money would come from in a Congress that is locked down against tax increases.

The House bill provides "offsets " for means testing for Medicare recipients that could generate some savings. For example, starting in 2018, the premiums would increase from 50% to 65% for Part B and D beneficiaries who earn between $133,500 and $160,000 ($267,000 − $320,000 for a couple). For those in higher income brackets, the premiums would increase from 65% to 75%.

The plan also calls for limits on first dollar coverage for some Medigap plans, starting in 2020. The IRS would also be authorized to impose levies of up to 100% on tax delinquent Medicare providers. Currently, the maximum levy is 30%.

In addition, Medicare reimbursements would be increased by no more than 1% in 2018 for post-acute care providers.

The total dollar value of the offsets was not clear.

It's also not clear if the bill has the support of Senate Democrats, who support the repeal of the SGR, but who said they cannot "guarantee" their support for the proposal unless it includes four years of additional funding for CHIP.