Permanent SGR Fix Still Being Discussed

Deadline Looms Amid Plans for Both Temporary & Permanent Solutions

Even so, there are other icebergs out there.

Artist’s Rendition of a typical Congressional Solution

Congress must soon decide whether to pass another “patch” or to finally enact a permanent Sustainable Growth Rate (“SGR”) repeal and replacement before the last “patch” expires on March 31, 2015. Recently, House Majority Leader Kevin McCarthy (R-CA) and House Ways and Means Committee Chairman Paul Ryan (R-WI) told attendees at the annual Federation of American Hospitals meeting in Washington, D.C., that permanent repeal and replacement was not possible, at this time. However, although we have no details, there may actually be a deal to permanently repeal and replace the Medicare physician payment formula currently be reviewed by Congressional leadership to see if they can garner enough votes for passage.

Why Can’t Congress Pass a Permanent Fix?

The main obstacle to passage is how Congress might come up with the $170 billion needed to pay for the cost of the fix. But there are now reports of a possible package that would only partially offset that cost, or even not offset it at all. While either approach would improve the chances of passing a bill, there is still probable opposition from both sides of the aisle.

Evidently, passing a bill has its political consequences… which seem to matter to certain Congressmen more than other, more altruistic considerations. Does that surprise you?

In the House, Republicans, especially those aligned with the Tea Party, demand that any such package completely pay for itself, so as not to add to the federal deficit. Hence, passage would require a significant number of Democratic votes. House Speaker John Boehner (R-OH) would then have to go against an unwritten House Republican rule that legislation isn’t to be passed without a majority of Republicans voting in favor. Since Boehner recently used a large number of Democratic votes to pass a funding bill for the Department of Homeland Security (one that did not include a provision blocking President Obama’s immigration policies), it is not very likely that he would be willing to do so again, so soon. Odds are that another temporary SGR “patch” will be passed, instead.

Another temporary SGR “patch” would probably not meet much opposition in the Senate, as long as any included offsets would be acceptable to Senate Democrats. Democrats would not be amenable to such things as a repeal of the ACA’s individual mandate, insurance reforms, or an increase in Medicare beneficiary payments. A Republican filibuster is unlikely, unless the bill would significantly increase the federal deficit. Senate Majority Leader Mitch McConnell (R-KY) is under public pressure to show that a Republican-controlled Senate can indeed pass legislation, and unlike the unwritten Republican rule in the House, there is no such Senate Republican rule that prevents him from utilizing a large number of Democratic votes.

How Might Congress Pay for This?

Who's in Your Pocket?

Who’s in Your Pocket?

Whether they pass yet another “patch” or a permanent fix, lawmakers will probably cover the cost via cuts to healthcare providers, including these possibilities:

  • extending the Medicare sequester and rebasing payments for disproportionate share hospitals for another year,
  • setting a timeline and parameters for bundled post-acute care,
  • changing post-acute care inflationary updates,
  • creating site-neutral payments for some providers on certain patients/procedures (e.g., inpatient rehab facilities/SNFs and hospital outpatient departments/physician offices), and
  • creating a uniform deductible for Medicare Parts A and B, which would have a bigger impact on SNFs and home health agencies since they are not currently subject to cost sharing.

Conclusion: Stay Tuned…

Debate over H.R. 3402 - Sign displays the trouble with Congress

Debate over SGR in the past – Sign displays the trouble with Congress, and yes, this is a real screen grab from C-SPAN, during debate of a previous attempted fix.

While rumors abound that lawmakers have settled on passing yet another temporary “patch” before March 31, 2015, there is still discussion of a permanent repeal and replacement. Since the cost of such a fix, permanent or not, is likely to be put on the backs of providers, developments on Capitol Hill over the next two weeks should be closely monitored.

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