Don’t Be Fooled, Prospects for Long-Term SGR Fix Still Dim

In light of Thursday’s bicameral, bipartisan release of a Medicare physician payment policy to permanently replace the Sustainable Growth Rate (SGR) formula – an achievement to be celebrated in its own right – some are seeing momentum toward passage of such a deal before the current doc fix  expires on March 31.

But the scope of what the committees issued Thursday represents as much of a step back as a step forward, at least relative to their aspirations and timeline for accomplishing them.

Once the appointment of Senator Baucus to be Ambassador to China was announced, the committees agreed to make it “as far as they could” toward a comprehensive SGR replacement policy prior to his confirmation, including identifying offsets to pay for the $125-150 billion (over 10 years) bill. For those who missed it, Senator Baucus was confirmed on Thursday.

Only in the past week did the key committees acknowledge that achieving agreement on offsets by this deadline was unattainable, but finalization of the so-called “extenders,” a hodge podge of Medicare payment plus-ups and other polices perennially included with the doc fix, was still the goal.

(Recall that the Senate Finance Committee passed an SGR replacement bill with extenders in December, but their House counterparts have yet to do so.)

In negotiations on that extenders element, House Republican leads reportedly would not agree to include beneficiary-oriented policies, such as funding for outreach to Medicare enrollees regarding low-income subsidy programs and for Family-to-Family Health Information Centers.

While some Democrats involved in the talks may have been inclined to make this concession, others sharply objected, scuttling a deal on this front and demonstrating the difficulty of compromise on this relatively non-controversial topic.

Furthermore, and has always been the assumption, identifying offsets for the package continues to be an exponentially heavier lift than any other aspect of the process. On that front, the key camps have outlined their broad parameters for what they might accept.

House Republican leads desire and likely require meaningful cuts to ACA-related spending as well as a substantial balance of Medicare beneficiary-impacting cuts, such as those relating to premiums and coinsurance.

On the other hand, Senate Majority Leader Reid, for example, has repeatedly voiced his opposition to any policies deemed adverse to Medicare beneficiaries being used as an offset to an SGR bill, not to mention his outright dismissal of cuts to central ACA programs. Senator Reid has gone so far as to say that he’d only accept cuts to the Offshore Contingency Operations (OCO) fund as a pay-for for the permanent SGR bill.

Part of Leader Reid’s position relates to the potential vulnerability of the Democrats’ control of the Senate in the 2014 election cycle. Try this understatement on for size: It’s hard to imagine a viable path to circumventing the stand-off between his position and that of the House Republicans.

While these various challenges to passage of a permanent SGR bill have been reasonably expected for some time (some of you have a faint “duh” percolating), it’s the past 5-10 days, including Thursday’s release, that actually demonstrate the odds of achieving this goal are truly minimal. In short, a breakthrough was possible but did not come to pass.

The Hail Mary was thrown, tipped, bobbled and … Richard Sherman just told me they shouldn’t try again. Take it from this Broncos fan, he’s probably right.

So it’s time for a field goal. A fallback is already in the works, at least in some corners. There’s a fairly unified assumption that a nine-month traditional doc fix will be that default option. The cost of that fix is approximately $15 billion, and we expect that soon the committees will turn their attention to finding the offsets to pay for that. So it’s more like a 57-yarder than a chip shot, but it’s a pretty good bet it’ll get done.

Getting all of the leaders of the committees of jurisdiction – in both chambers and on both sides of the aisle – to agree to a unified approach to reforming Medicare physician payments is an historic achievement, and those who have labored so devotedly to the task for more than a year deserve an extraordinary amount of credit.

But it’s really what Thursday’s package lacks, at this point, that tells the story. And that story, which began with the establishment of the ill begotten SGR formula in the Balanced Budget Act of 1997, doesn’t look like it’s going to end any time soon.

Billy Wynne is the Founder and CEO of Healthcare Lighthouse, a one-stop shop for comprehensive policy information for healthcare organizations and businesses. He is also a Partner at the Washington policy and lobbying firm Thorn Run Partners. Previously, he served as Health Policy Counsel to the Senate Finance Committee.

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Billy WynneVince KuraitisCurly Harrison, MDInside BaseballDon't Go Back to Rockville Recent comment authors
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Billy Wynne

Vince: It’s true Congress removed the 9-month doc fix from the debt limit bill, in part because a “clean” bill was all that could pass the House but also, in part, because the physician community (including some House Members) objected. But, unfortunately, I would not call it off the table; it’s still the most probable outcome by the March 31 deadline for action. Doctors have some leverage but there are reasons that go much deeper than apathy that explain why a permanent SGR repeal has been so elusive. I wrote three doc fix bills for Chairman Baucus when I worked… Read more »

Vince Kuraitis

Billy, Thanks for your perspectives. I appreciate that you are much closer to this issue than the rest of us. My understanding (as of yesterday) is that the 9 month SGR fix proposal is off the table. My distant interpretation of this is that the doctor associations are making a 4th down play attempt to get the ball over the line — field goal is not an acceptable option. What leverage do the docs have? If the SGR fix isn’t passed, every patient in America will hear about this while in the exam room with their MD. Do you interpret… Read more »

Curly Harrison, MD
Curly Harrison, MD

Simple fix: Pay every full time doctor $ 1 million per year with the proviso that they provide safe and cost effective care to all of their patients, and that they (and their hospital employers, if any) cease making up the real truth and faux indications for tests and procedures that are medical unnecessary.

Inside Baseball

It’s consistent with what I suspected: no appetite for the “pay-fors”.
A lot of the preliminaries were courtesy to Baucus, who really wanted to solve this issue before he left. I cannot tell you how disappointed I am in medicine’s representatives. They sold out their members for a crap payment scheme, and then didn’t get it!

Don't Go Back to Rockville

Great post. Classic Washington behavior.

When they write the chapter about beltway politics in the last twenty five years, the SGR “doc fix” will be center stage, example A …

Not at all surprising this story isn’t making it through the media filter …