Practice Economics

House budget includes SGR patch; permanent fix sails through committees


WASHINGTON – Congress has moved the ball forward on permanently replacing the Medicare Sustainable Growth Rate formula, but with time short for a fix by year’s end the House has voted to approve a temporary 3-month reprieve from the 20% cut due to take effect Jan. 1.

In a 332-94 vote, with eight abstentions, the House on Dec. 12 approved the Bipartisan Budget Act of 2013, a wide-ranging budget agreement that includes the 3-month patch. The bill also would increase physician pay by 0.5% through March.

The Congressional Budget Office estimated that the temporary fix would cost $3.3 billion in 2014 and a total of $7.3 billion through 2023. The fix would be paid for by cutting Medicaid payments for hospital-based charity care and to long-term care hospitals.

Rep. Paul Ryan

It also would extend the 2% sequestration cuts for Medicare providers by 2 years, from 2021 to 2023.

The Senate has yet to consider the budget package including the SGR patch; it is expected to do so before its holiday recess. President Obama has said that he supports the deal.

The agreement, brokered by House Budget Committee Chairman Paul Ryan (R-Wisc.) and Senate Budget Committee Chairman Patty Murray (D-Wash.), adds about $63 billion in discretionary federal spending over 2 years and makes targeted cuts and fee hikes to bring about overall deficit reduction of about $23 billion.

Although physician groups aren’t thrilled about the continuation of the Medicare cuts under sequestration, most favor the temporary SGR reprieve and the restoration of some funding to federal health programs.

Dr. Ardis Dee Hoven, president of the American Medical Association, said that the continuation of the sequester cuts in Medicare is "frustrating" and poses the risk of destabilizing physician practices. "The concept of the sequester is probably not the best way to rein in spending," she said.

Dr. Clifford A. Hudis, president of the American Society of Clinical Oncology, praised the agreement for providing funds that could restore cuts in medical research and cancer care at the National Institutes of Health. He expressed disappointment, however, that the bill does not reverse cuts to Medicare, including reductions in the payments for physician-administered drugs under Medicare Part B.

"Oncologists are doing everything possible to continue providing care for Medicare patients, but this reduction has forced many in private practice to send patients to hospitals for chemotherapy because they cannot afford to administer these drugs in their office," Dr. Hudis said in a statement.

Sen. Patricia Murray

Physician organizations viewed the patch as necessary while Congress continues to work on a permanent SGR fix. Both the House and Senate took steps toward that goal on Dec. 12.

The House Ways and Means Committee voted 39-0 to approve its replacement proposal, which essentially adds on to the bill approved by the House Energy and Commerce Committee in July.

"This may not be the final step, it’s a very important step forward," said Rep. Kevin Brady (R-Tex.), chairman of the Ways and Means Health Subcommittee.

The House did not address how to pay for the permanent replacement. House Ways and Means Chairman Dave Camp (R-Mich.) noted that the Congressional Budget Office has estimated that it will cost $116 billion over 10 years to repeal the SGR, which is "more than half the cost 2 years ago." Even though that is the lowest estimate ever, "I am of no illusion that finding pay-fors will be an easy task," he said.

The Senate Finance Committee also did not include a way to pay for repeal in its proposal.

The bill had widespread bipartisan support in the committee, but some Senators raised concerns about the lack of a funding mechanism. Sen. Pat Roberts (R-Kan.) said that he wouldn’t support the bill until he could see how it would be funded.

Sen. Orrin Hatch (R- Utah), the committee’s top-ranking Republican, said that the offsets would be worked out once the bill had cleared the initial policymaking phase.

"This bill will be offset, period, or it’s not going to go through both houses," he said. "This bill will be paid for."

The panel agreed to add a provision aimed at expanding access to community mental health services. The amendment, offered by Sen. Debbie Stabenow (D-Mich.) and Sen. Roy Blunt (R-Mo.), would create pilot programs in 10 states to ensure that community behavioral health clinics offer a full range of mental health services, including 24-hour crisis care, substance abuse treatment, and expanded support for families.

Physician groups praised the continued congressional action.


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