As it considers SGR fix, Senate weighs fundamental shifts to Medicare


Image by 401(K) 2012 via Flickr
Image by 401(K) 2012 via Flickr

After voting to eliminate the Sustainable Growth Rate (SGR) formula last week, the U.S. House of Representatives sent the measure to the U.S. Senate where the bill’s fate is uncertain. When the Senate recessed on Friday without considering the bill, H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015, it pushed off a vote until mid-April.

The bill’s supporters were hoping for a Senate vote last week because, as Jennifer Haberkorn, of Politico Pro, and Mary Agnes Carey explained for Kaiser Health News, the Senate’s return date of April 13 leaves two weeks for those who like the bill and those who don’t to gather support and consider their options.

“Traditionally in Washington, the more time you have, the more opportunity there is for opposition to fester. That should be a concern in this case because it is two weeks before the Senate returns,” Haberkorn said.

If the Senate passes the bill or a similar measure, it will make significant changes to Medicare. In addition to changing the payment rules for physicians, the bill also revises how Medicare enrollees will pay for care. In addition, the bill adds funding for the Children’s Health Insurance Program for two years, provides $7.2 billion for community health centers, raises $34.3 billion by increasing costs for wealthier Medicare enrollees, and cuts funding to hospitals by almost $20 billion, Paul Demko reported in Modern Healthcare.

The most talked-about provision in the bill prevents an automatic 21 percent cut in physician payments that will go into effect April 1. The federal government can delay payments going to doctors so that the effects of the pay cut may not be felt until the middle of the month, a factor that gives the Senate some time to act on the bill.

The bill calls for an annual payment increase of 0.5 percent for four years and then no increase for the next six years. “That guarantees physician income from Medicare will lose ground to inflation over the next decade,” wrote Merrill Goozner in Modern Healthcare.

For physicians who want to earn more from Medicare, the bill allows them a 5 percent bonus from 2020 to 2024 if by 2019 they get at least 25 percent of their Medicare revenue from value-based reimbursement, such as accountable care organizations, or bundled payments, Goozner added.

The bill also calls for high-income seniors to pay more for Medicare. By 2018, individuals earning $133,500 to $214,000 (about 2 percent of beneficiaries) would pay more for their Medicare coverage, Carey and Haberkorn reported. Critics of the bill, however, say the increased payments from beneficiaries do not fully cover the $140 billion the legislation will add to the federal deficit over the next decade.

In a thorough analysis in The Huffington Post, Jonathan Cohn explained that conservatives believe having wealthier Medicare beneficiaries pay more would make a move to privatize Medicare more likely. But liberals don’t like shifting costs to seniors because such a measure could undermine support for the program, he wrote.

Although both Democrats and Republicans voted for the House bill, liberals believe the legislation could weaken Medicare and conservatives believe it could strengthen the program, Cohn wrote. The house vote was 392 to 37. President Obama has said he would sign it.

While the House vote may put pressure on the Senate to vote in favor, there are some provisions in the bill that could be contentious. The CHIP program, for example, is funded for two years and some Democratic senators want funding for four years.

Also, the AARP and other consumer groups do not like the fact that Medicare beneficiaries are being asked to pay for about $35 billion in increased costs through greater out-of-pocket expenses and higher Part B premiums, wrote Carey and Haberkorn.

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Joseph Burns

Joseph Burns is AHCJ’s health beat leader for health policy. He’s an independent journalist based in Brewster, Mass., who has covered health care, health policy and the business of care since 1991.