Congress kicks off 2015 with bipartisan, bicameral collaboration
By Linda Rouse O’Neill
SGR winners, losers become much clearer
Last month, HIDA’s Health Reform Update speculated that it would be difficult at best for Congress to agree on repeal and replacement legislation for the physician sustainable growth rate (SGR) payment formula before April 1, mainly due to difficulties finding offsets amenable to both political parties.
While it is true that the April 1 deadline passed without permanent SGR repeal legislation signed into law, the resolve of congressional leaders to pass a permanent solution was stronger than anticipated. In rare bipartisan fashion, the House overwhelmingly approved a $214 billion bill (by a vote of 329-37) in early spring that repeals the SGR formula and replaces it with a system that incentivizes quality. This allowed the Senate to follow the House’s lead and approve the bill the week of April 13, which the president said he would sign into law.
What broke the logjam was the deal between Speaker Boehner (R-OH) and Minority Leader Pelosi (D-CA) to only partially pay for the package. Specifically, only $70 billion of the approximately $200 billion bill is offset — half of it will come from other providers and half will come from wealthy seniors. Specific provider cuts include:
- Hospital Update: Hospital customers will receive a 3.2 percent base payment rate phased in starting in FY 2018.
- Medicaid Disproportionate Share Hospital (DSH) Savings: Any Medicaid DSH changes are delayed until FY 2018; the policy also will now be extended through 2025.
- 1% Market Basket Update for Post-Acute Provider Customers: Replaces the current 2018 market basket update with a 1 percent update for long-term care hospitals (LTCHs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), home health providers (HH), and hospice providers.
- Income-Related Premium Adjustment: Starting in 2018, the percentage that beneficiaries must pay toward their Part B and D premiums will increase for two specific income brackets (2% of beneficiaries).
- Medigap Reform: Limits first dollar coverage on certain Medigap plans by prohibiting plans from covering the Part B deductible. This change applies only for future retirees beginning in 2020.
The new Medicare physician payment formula will take several years to implement through a rigorous regulatory process so the full extent of its impact remains to be seen. Apart from physicians, the immediate winners with the passage of permanent SGR repeal and replace legislation are community health centers (CHCs). CHC funding was set to expire in September 2015 but these centers and the National Health Service Corps can expect approximately $8 billion in additional funds.
The lab market is not expected to receive much of an impact from SGR reform as lab reimbursement is being revamped as part of last year’s SGR patch, which requires Medicare rates to be reset based on private plan rates. Experts anticipate up to a 26 percent Medicare rate reduction for many lab tests over the next several years.
2015 is already shaping up to be a busier year for healthcare policy than expected! The next significant healthcare policy milestone will be the highly anticipated Supreme Court decision in June on the validity of Affordable Care Act tax subsidies.
HIDA Government affairs will continue to monitor these and other developments to further educate our industry. For more information, visit us at www.HIDA.org or contact us at HIDAGovAffairs@hida.org.