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Reform Update: Bill to fix SGR could repeal or delay ACA's individual mandate


By Jessica Zigmond
Posted: March 7, 2014 - 4:00 pm ET
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House Republicans have found another back-door way to attempt a dismantling of the Patient Protection and Affordable Care Act. Next week, the lower chamber is expected to vote on legislation that would permanently repeal Medicare's physician payment formula and which might include a provision to either repeal or delay the ACA's individual insurance mandate as a way to pay for the sustainable growth-rate fix. But as before, their efforts are certain to die in the Senate, making another temporary SGR patch more likely as a March 31 deadline rapidly approaches.

A spokeswoman for House Majority Leader Eric Cantor (R-Va.) confirmed the House will vote on the SGR Repeal and Medicare Provider Payment Modernization Act of 2014, joint legislation that the Senate Finance, House Ways and Means and House Energy and Commerce committees unveiled earlier this year.

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It remains unclear if the GOP lawmakers will attach a provision to repeal the individual mandate or delay it by several years, as one news report suggested. Earlier this week, the House voted 250-160 to delay the ACA's individual mandate for a year. The bill from Rep. Lynn Jenkins (R-Kan.) picked up support from 27 Democrats.

According to the nonpartisan Congressional Budget Office, a one-year delay of the individual mandate would save about $9 billion over 10 years. A permanent repeal of Medicare's SGR, meanwhile, would cost about $138 billion over 10 years.

Julius Hobson, a senior policy adviser at the law firm Polsinelli and former lobbyist for the American Medical Association, said this approach, using a $9 billion savings to fund a $138 billion cost, is not likely the path to solving the SGR problem, which has plagued lawmakers and Medicare-participating physicians for more than a decade.

“We know the Senate is not going to accept that,” Hobson said, referring to the repeal or delay of the ACA's mandate. “If they do this, it moves the policy of the doc fix another step forward,” he added. “It does not, however, mean we're a step forward to a final solution.”

Hobson also noted the condensed time frame that lawmakers now have, given that a temporary patch to the SGR ends March 31 and Congress will adjourn for a weeklong recess during the week of March 17.

All of this points to the possibility of another temporary fix until congressional leaders can reach agreement on how to pay for the cost of repealing the SGR. The CMS could hold payments to providers for roughly two weeks after March 31, he noted, which would essentially buy lawmakers more time to find a solution.

“One of the things about this week is that the negotiations have been kept very quiet—no leaks,” Hobson said of the SGR discussions on Capitol Hill. “It would suggest they have not made a lot of progress.”

FAH urges 'stay the course'

The Federation of American Hospitals this week urged House and Senate budget leaders to consider the findings of a new study from health economics and consulting firm Dobson DaVanzo & Associates (PDF) that suggests about $900 billion in savings to Medicare through 2024 is possible if the current rate of spending per beneficiary continues over the next 10 years. Put another way: structural healthcare reforms are working and hospitals should “stay the course,” the report said. Chip Kahn, president and CEO of the FAH, included a letter (PDF) to budget leaders that notes hospitals have absorbed about $117.5 billion in federal funding cuts since 2010, and that further reductions could jeopardize access to care for patients.

GAO to investigate Cover Oregon exchange

Also this week, the Government Accountability Office accepted a request from the House Energy and Commerce Committee to investigate Cover Oregon, the state's health insurance exchange. “The investigation will help taxpayers get answers about what happened at Cover Oregon and the over $300 million that has been allocated to the state,” Rep. Greg Walden (R-Ore.), chairman of the House Energy and Commerce Subcommittee on Communications and Technology.

Sebelius will testify on 2015 budget

Next week, HHS Secretary Kathleen Sebelius will appear before the House Ways and Means Committee to answer questions about the Obama administration's fiscal 2015 budget. Sebelius is expected to appear before Chairman Dave Camp's (R-Mich.) panel Wednesday, March 12 at 10:00 a.m. Eastern.

Follow Jessica Zigmond on Twitter: @MHjzigmond


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