Senate passes SGR deal, averting 21% Medicare pay cut for doctors

The bill now goes to the president for his signature

Last night’s Senate SGR vote puts to rest the likelihood of another ICD-10 delay.

The Senate on Tuesday voted 92-8 to permanently repeal Medicare's controversial sustainable growth rate (SGR) formula, ending a cycle of 17 short-term fixes for physician payment rates.  

The bill—which the House voted 392-37 to approve last month—now goes to President Obama for his signature. He is expected to sign it.

Also see: What the historic SGR bill means for providers

The measure would provide a 0.5% annual raise through 2019 for providers who participate in Medicare before transitioning to an incentive-based payment system designed to encourage participation in alternative payment models. The bill includes several other measures related to health spending, such as funding for community health centers, which serve low-income individuals in every state.

In addition, the bill includes a two-year extension of CHIP funding. Further, the bill would delay fully enforcing CMS' so-called "two-midnight" rule for two months.

Overall, the SGR replacement measure would cost about $213 billion over 10 years. It would offset about $70 billion of the projected costs and add about $140 billion to the federal deficit over 10 years, according to estimates. The offsets include almost $35 billion in increased Medicare premiums for higher-income beneficiaries. The premium increases would not take effect until 2018. The bill also includes payment cuts to home health agencies, hospitals, and nursing homes.

Amendments rejected

Senate lawmakers on Tuesday considered and rejected six amendments that would have:

  • Changed the bill's CHIP funding extension from two years to four years;
  • Directed more funding to women's health care and eliminated abortion funding restrictions included in the measure;
  • Repealed a cap on Medicare physical therapy services;
  • Changed how Medicare incentivizes health care quality;
  • Repealed the Affordable Care Act's individual mandate; and
  • Required the measure to be fully funded.

Many federal officials praised the vote, and prominent lawmakers cheered the measure.

Senate Majority Leader Mitch McConnell (R-Ky.) said, "Instead of kicking this important Medicare payment issue down the road again, a strong bipartisan majority in Congress voted to finally solve the problem and ensure that seniors on Medicare don't lose access to their doctors."

Sen. Ron Wyden (D-Ore.) called the bill "a milestone for the Medicare program."

However, Sen. Mike Lee (R-Utah) criticized Republicans who voted for the measure because it is not fully funded, which he said goes against the party's goal of balancing the federal budget. Sen. Ted Cruz (R-Texas) expressed similar views, noting that an SGR replacement bill should be "fully paid for and include significant and structural reforms to Medicare that provide seniors more power and control over their health care."

CMS Chief Actuary Paul Spitalnic also noted that the measure could lead to payments cuts "for most physicians" after 2025. He said, "If not addressed by subsequent legislation, we expect that access to and quality of physicians' services would deteriorate over time for beneficiaries."

Although a 21% cut to physician reimbursements under the SGR took effect April 1, CMS earlier this month said that, barring congressional action, it would not begin processing the payment cuts until April 15. A CMS official said, "Should Congress act subsequently, CMS will reprocess those claims paid at the lower payment rate to reflect the new payment rates." However, such a move could increase administrative costs (New York Times, 4/14; Haberkorn, Politico, 4/14; Hughes, Wall Street Journal, 4/14; Pear, New York Times, 4/14; Demko, Modern Healthcare, 4/14; DeBonis, "Post Politics," Washington Post, 4/14).

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