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Sustainable Growth Rate Fix Passes House but Stalls in Senate

By Jennifer Bresnick

Update: The Senate has declined to conduct a vote on the SGR fix until after it returns from its recess in mid-April.  CMS has announced a contingency plan for providers to address the 21 percent Medicare reimbursement cut that will go into effect on April 1.

Medicare claims submitted electronically will be held unprocessed for the first fourteen calendar days in April, while paper claims will be suspended for 29 days after receipt.  Claims for services rendered on or before March 31 will not be affected.

More details about Congressional plans to address the sustainable growth rate will be provided by April 11, CMS said in its statement.  


The Medicare Sustainable Growth Rate (SGR) fix, a piece of bi-partisan legislation that has significant financial implications for the healthcare industry, passed a vote in the House of Representatives yesterday, but failed to make a sufficient impression on the Senate before a planned recess.

The bill, which eliminates the threat of a 21 percent cut to Medicare reimbursements while making major changes to value-based reimbursements and health IT programs, isn’t just a rare example of bitterly divided lawmakers coming together for a common cause, but a long-awaited revamping of a broken calculation that has frustrated and worried physicians for nearly two decades.

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The House voted 392-37 in favor of the sustainable growth rate fix bill, which Minority Leader Nancy Pelosi (D-CA) called a “historic bipartisan package” that will be “transformative” for the healthcare industry.

The bill would secure annual payment increases of .5 percent for physicians for the next five years, but would also codify many of the value-based payment arrangements that have become crucial for achieving long-term healthcare reform goals. Several CMS quality incentive programs would be bundled into a single reporting structure, rewarding physicians for delivering high quality, safe, and cost-conscious care.

The sweeping victory in the House prompted an outpouring of praise from healthcare advocacy groups including the American Medical Association (AMA) and Medical Group Management Association (MGMA).

“The AMA applauds the US House of Representatives for overwhelmingly passing a long overdue bill to permanently eliminate the flawed Sustainable Growth Rate (SGR) formula and put in place important Medicare payment and delivery reforms that will improve the health of the nation,” said AMA President Robert M. Wah in an emailed statement. “When passed by the Senate, the bill will put an end to the cycle of Congress passing expensive patches to extend a policy that all agree was bad in the first place.”

“The House of Representatives has voted to remove the dark cloud of financial uncertainty over physician group practices,” added Halee Fischer-Wright, MD, MMM, FAAP, MGMA President and CEO. “Medicare innovation has been hampered far too long by the SGR. The Senate is one vote away from returning stability to patients and physicians in Medicare. MGMA urges the Senate to immediately vote to repeal the SGR.”

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Most importantly, says the Coalition for ICD-10, the legislation makes no mention of another sneaky ICD-10 delay, which took the industry by surprise during last year’s debate.  “The Coalition for ICD-10 applauds Congress for permanently addressing the Sustainable Growth Rate, which has been a significant concern for physicians and the entire healthcare industry for many years,” the organization stated. “We greatly appreciate that the bill does not include a delay to ICD-10 adoption and strongly urge that any amendment to delay remain out of the final package.”

But while lawmakers in the House patted themselves on the back for actually being able to agree on something, Senators declined to give themselves the same opportunity to shine.  Thursday marks the start of a two-week recess for the Senate, which only has until March 31 to pass the legislation in order to avoid the steep cuts to Medicare reimbursements that have piled up since 1997.

As in previous years, Congress could opt instead in pass a temporary patch that would protect healthcare providers from the cuts until leadership can agree on a new permanent fix that doesn’t raise as many concerns as the current attempt.  But House leaders have rejected that idea, hoping to put pressure on the Senate to come to a vote before the current arrangement expires.

The Senate has some good reasons to be skeptical that this sustainable growth rate fix is the one that should get the green light.  Some budget hawks have decried the $200 billion price tag for the sustainable growth rate fix, which is the result of more than a dozen year-long patches that have run up the price tag of a permanent solution.

The package would also require higher Medicare coverage prices for some wealthy beneficiaries and raise the cost of supplemental coverage for even more elderly patients in order to cover about $70 billion of the fix’s costs over the next decade.  While the provision mirrors the actions of many private payers, who have steadily raised out-of-pocket expenses for patients in order to promote financial responsibility and awareness of the steep costs of care, decreasing service utilization in the senior population may not be the answer to slashing spending for the program.

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“The hope is people will be more sensitive to costs and go without unnecessary care,” Tricia Neuman, senior vice president and director of the Program on Medicare Policy at the Kaiser Family Foundation, told Reuters. “But if instead, some forego medical care that they need, they may require expensive care down the road, potentially raising costs for Medicare over time.”

While the deal certainly isn’t perfect, allowing the current SGR patch to expire would make things even worse for healthcare providers already teetering on the edge of financial sustainability.  The deep cuts to Medicare services would have an immediate and detrimental effect on care access and the healthcare revenue cycle.

The Senate has just a few hours left to decide whether it will vote on the measure or attempt to force yet another temporary patch through a contentious legislative maze.  Stay tuned for the latest updates on HealthITAnalytics.com.

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