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Reform Update: Providers grow more nervous that SGR won't be repealed

By Jessica Zigmond
Posted: March 14, 2014 - 4:00 pm ET

(Story updated at 4 p.m. ET.)

Healthcare providers and policy analysts are increasingly anxious that Congress will fail to eliminate Medicare's flawed physician payment formula and once again default to a temporary fix.

All eyes turned to the Senate after the House of Representatives passed a bill on Friday that repeals the sustainable growth-rate formula and also includes a five-year delay of the financial penalties for people who don't purchase health insurance—which the Senate is sure to reject.

Congress will return from a weeklong recess on March 24, which gives lawmakers one week until the temporary SGR patch expires on March 31.

Under an amendment added by House Ways and Means Committee Chairman Dave Camp (R-Mich.), the House bill would keep the Patient Protection and Affordable Care Act's individual mandate in place but would not penalize anyone for violating it until 2019. The nonpartisan Congressional Budget Office estimated this week that this move would increase the number of uninsured Americans by about 13 million in 2018.

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The SGR Repeal and Medicare Provider Payment Modernization Act passed 238-181 and picked up support from 12 Democrats. Though cheered by House Republicans, the legislation is viewed by Democrats, policy analysts and healthcare providers as purely a political move that is not likely to go anywhere beyond the House floor.

“We're dismayed that Congress sabotaged their own work by linking legislation to unrelated, ideological issues—particularly in light of the nearly universal opposition to such action from patients, insurers and the medical community,” Dr. Reid Blackwelder, president of the American Academy of Family Physicians, said in a statement reacting to the vote.

Even the conservative Heritage Foundation did not support Friday's House vote. “If you are going to have a permanent repeal, which incurs permanent costs, you need permanent savings to offset those costs,” Robert Moffit, a senior fellow at Heritage, said in a statement.

Senate Finance Committee Chairman Ron Wyden, who introduced a version of the SGR repeal this week, said he is committed to sound, sensible policy over politics.

The Oregon Democrat also cautioned that hospitals, home health providers, drug companies and skilled-nursing facilities will once again be at risk if Congress doesn't find approve a permanent SGR repeal. “Make no mistake about it: Those providers are going to be the ones who pay for yet another patch,” Wyden said on the Senate floor.

The bill that Wyden introduced this week—the Medicare SGR Repeal and Beneficiary Access Improvement Act of 2014—includes the compromise agreement from the Senate Finance, House Ways and Means and House Energy and Commerce committees to repeal and replace the SGR, as well as the extension of certain Medicare programs that are expiring.

It does not, however, include a way to pay for these provisions. Meanwhile, the House bill that passed on Friday includes the compromise agreement on SGR, no language on the Medicare extenders and the dead-on-arrival delay in the ACA's individual mandate to pay for it.

“For me, the positive side is the House has done something,” said Julius Hobson, a senior policy adviser at law firm Polsinelli and a former lobbyist for the American Medical Association. “And when they get back from recess, the Senate will attempt to do something. It may heighten talks between the House and Senate, and that's my hope.”

But others expressed more frustration than hope, given that lawmakers still are not talking seriously about how to pay for repealing the SGR, which the CBO estimates will cost $138.4 billion over 10 years. This week, the bipartisan Committee for a Responsible Federal Budget released a statement that criticized House Republicans for trying to pay for a permanent repeal of the SGR with a temporary delay of the individual mandate's penalties, which the nonpartisan fiscal watchdog group said will only add to long-term deficits.

The organization also criticized House Democrats for proposing “phantom war savings” as a way to pay for the overhaul and the Senate for proposing none. The “phantom war savings” refers to funding for the Global War on Terrorism/Overseas Contingency Operations, most commonly referred to in Washington as “OCO funds.” Congress provided about $92 billion in OCO funding for 2014 and none for subsequent years, according to the CBO.

“There are ways to look at a package of things, from expanded means-testing to rationalizing co-payments to reforming Medigap plans,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

Safety net program extended

The Obama administration is again extending the safety net insurance program for Americans with pre-existing conditions to give them more time to sign up for a standard health plan though the insurance exchanges. The administration said it would extend the Pre-Existing Condition Insurance Plan, which was slated to end March 15, until April 30. In the extension notice, HHS warned “time is running out,” and pushed remaining PCIP members to sign up for an exchange plan before open enrollment ends March. 31.

—Virgil Dickson

Medical-loss ratio rules to be relaxed

Because insurance companies were compelled to spend heavily to help HHS recover from the disastrous launch of, federal officials intend to relax the healthcare reform law's medical loss-ratio rules requiring carriers to spend at least 80% of premiums on medical costs. “We intend to propose standardized methodologies to take into account the special circumstances of issuers associated with the initial open enrollment and other changes to the market in 2014, including incurred costs due to technical problems during the launch of the state and federal exchanges,” HHS said in a notice published in the Federal Register this week.

—Paul Demko

Bill would aid immigrants here lawfully

Rep. Michelle Lujan Grisham (D-N.M.) this week introduced the Health Equity and Access under the Law (HEAL) for Immigrant Women and Families Act of 2014, legislation that would ensure lawfully present immigrants have access to Medicaid, the Children's Health Insurance Program and tax credits provided under the Affordable Care Act. In a statement, Lujan Grisham noted that although they pay taxes, more than 600,000 legal permanent residents are restricted from receiving federal healthcare benefits. As a result, this leads to more emergency room visits for common problems like the flu and upper respiratory infections.

Follow Jessica Zigmond on Twitter: @MHjzigmond

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