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H.R. 2: THE MEDICARE SGR REFORM AND THE CHILDREN'S HEALTH INSURANCE REAUTHORIZATION ACT PASSES THE U.S. SENATE

April 17, 2015
Areas of interest(s): moving forward, news, public health, sgr

The SGR Reform and the Children's Health Insurance Reauthorization Act has finally crossed the U.S. Senate and passed after a decade of exhausting debates.

by Dominic Tovar and Elizabeth McNeil

SGR-update

The SGR Reform and the Children's Health Insurance Reauthorization Act has finally crossed the U.S. Senate and passed after a decade of exhausting debates. This extremely important passage disrupts the original SRG outline which has held back a plethora of issues including payment plans and physician involvement in regards to determining how much input they are able to contribute on quality. While the SGR repeal will stand as an example of the effect that group effort maintains, it will also allow for there to be new discourse on other healthcare issues. To view the full text of the bill, click here.  Following this introduction are excerpts from an update by Elizabeth McNeil, Vice President of the Federal Government Relations for CMA.

After a decade of battling, the U.S. Senate, in a whopping vote of 92-8,  passed H.R. 2, the monumental, bipartisan Medicare SGR Payment Reform and Children's Health Insurance Program (CHIP) Reauthorization Act.  Both Senators Feinstein and Boxer voted in the affirmative.  President Obama is expected to immediately sign it into law.  Two weeks earlier, the U.S. House of Representatives adopted the legislation in a landslide vote of 392-37.  The CMA applauds this rare, bipartisan achievement in a deeply divided Congress.  CMA, AMA and more than 780 state and national physician organizations supported the bill.  In 2013, the policy was jointly developed on a bipartisan basis by the three House and Senate health committees.  This year, U.S. House of Representatives Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA) are credited with negotiating the final budget offsets to fund the SGR bill.  

 
CMA extends a sincere thank you to all physicians for the extraordinary campaign this last decade to end the SGR.  CMA physicians kept up the fight these last two years to hold Congress' feet to the fire to develop a comprehensive bill to reform Medicare physician payments.  The unity within organized medicine finally put this over the finish line.  Moreover, 52 out of 54 Members of the California Congressional delegation voted to support physicians.  This is an incredible achievement in one of the most dysfunctional Congresses in history.  Please be sure to contact your Representative and the California Senators to thank them for their support via the AMA's website, www.FixMedicareNow.org.  Click on physicians and click on email.
 
Below is a brief summary of the major provisions of H.R. 2:
·         Medicare SGR Payment Policy:
·         Repeals the SGR;
·         Provides automatic, stable 0.5% updates each year for 4 years;
·         In 2019, physicians can choose to participate in one of two payment track options:
·         1: Maintains a Fee-for-Service Track that simplifies and consolidates the existing quality reporting programs, reinstates large bonuses up to 9% and reduces current penalties; 2: The Alternative Payment Model Track provides 5% bonus payments and allows physicians to develop the new models, such as primary care/specialty medical homes.
·         Physicians are also required to be involved in defining quality;
·         $125 million in funding to help small practice physicians transition to the alternative models or quality reporting programs; 
·         Reinstates bundled payments for the 10-day and 90-day global surgical services;
·         Provides total cost of care data to help physicians better manage their practices;
·         Mandates interoperability of EHR systems;    
 
While H.R. 2 is far from perfect, it represents a significant improvement over the current Medicare program which mandates penalties up to 13% in the coming years with no opportunities for payment updates or bonuses.  This bill consolidates the burdensome reporting programs and reinstates significant bonus payments. By repealing the SGR and providing annual updates, it provides stability to physician practices that allows for longer term planning.  Significantly, it allows physicians to design new payment systems that work for physicians and patients instead of government bureaucrats.  And it mandates physician involvement in defining and developing quality measures.  Moreover, once the costly SGR is repealed, it will be much easier for physicians to work with Congress to make improvements to the payment system (such as increasing the annual update) at a lesser cost. The enormous cost of the SGR has been a barrier to making any improvements.
 
·         Extends the expiring Children's Health Insurance Program (CHIP) for 2 years at the higher ACA funding levels:  It covers nearly 1 million children in California who would otherwise lose their insurance.  CHIP was formerly known as Healthy Families in California before it was folded into the Medi-Cal program.  However, it still enjoys a 60% federal funding match.   
·         Extends the expiring Community Health Center funding.
·         Extends the important National Health Service Corps Program and the Teaching Health Centers Rural Primary Care Residency Training Programs (created in the ACA) through 2017. There are several teaching health center residency programs in California.
·         Makes permanent the Qualifying Individual Medicare program that helps low-income seniors pay for premiums and continues the Transitional Medical Assistance Program for Medicaid families transitioning from welfare to work.
·         Extends the moratorium on RAC audits of the hospital two-midnight rule which helps hospitals and physicians.
·         Delays the ACA cuts to Disproportionate Share Hospitals for one more year.
 
·         FUNDING SOURCES: 
1.  ~$200 billion (non-partisan Congressional Budget Office cost estimate) will not be fully offset with funding sources.  The SGR repeal portion of the bill will not be offset.  For 12 years, Congress has stopped the SGR payment cuts and the SGR never takes effect.  Therefore, the SGR savings to the federal government are phony.  Speaker Boehner and Leader Pelosi have rightly concluded that the cost to repeal the SGR should be $0.  The Wall Street Journal and the Americans for Tax Reform agree. 
 
2.  The remaining $70 billion will come from the following:
-Deductibles for new MediGap policies starting in 2020;
-Increased premiums for the 2% of very high income seniors: 15% more for couples making $267-320,000 and 20% more for couples making more than $320,000 in retirement income. 
-$35 billion in payment cuts to hospitals and others providing post-acute care services.  This does not apply to physicians.