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Henry Aaron, a senior fellow at the Brookings Institution

'Doc-fix' bill elicits grumbling, but swift passage likely

By Paul Demko
Posted: March 26, 2014 - 9:30 pm ET

Nobody is completely happy with the "doc fix" deal that was announced Wednesday by House Speaker John Boehner but expectations are the deal will quickly pass both the House and Senate anyway. In a divided Congress that can't decide on how to fund a permanent fix to the vexing sustainable growth-rate issue, another patch is the best that can be done this year.

The one-year patch delays yet again any tough decisions on how to pay for permanent repeal and replacement of Medicare's unpopular SGR formula for physician payments.

“If further evidence was needed of the paralytic effect of bad relations between the parties this is it,” said Henry Aaron, a senior fellow at the Brookings Institution. “Fixing the SGR, though not easy, is long overdue.”

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Advocates of responsible budgeting pointed out that a large chunk of the roughly $20 billion cost is paid for through a budgeting gimmick that doesn't actually save any money in the long run. Supporters of finally ending the decade-long practice of kicking-the-SGR-can down the road—most notably new Senate Finance Chair Ron Wyden (D-Ore.)—groused that it comes up decidedly short on that front. Even doctors—who face a potential 24% cut in Medicare reimbursements April 1 if a deal isn't cut—were displeased with the deal.

The American Medical Association, the largest trade group for physicians, immediately called for House members to vote against the bill when it comes up for an expected floor vote Thursday. “By extending the Medicare provider sequester and 'cherry picking' a number of cost savings provisions included in the bipartisan, bicameral framework, the (bill) actually undermines future passage of the permanent repeal framework,” said AMA president Dr. Ardis Dee Hoven, in a statement. “Further, it would perpetuate the program instability that now impedes the development and adoption of healthcare delivery and payment innovation that can improve healthcare and strengthen the Medicare program.”

The measure, perhaps unexpectedly to some, also goes far beyond SGR in addressing other industry issues. Hospitals were pleased with a number of “policy breathers” included in the legislation, according to Chip Kahn, president and CEO of the Federation of American Hospitals. Most notably, the legislation provides a six-month extension to comply with the “two midnights” policy, a controversial rule limiting Medicare payments to hospitals for short in-patient stays. The bill also extends programs that provide additional funding for rural hospitals.

“This is likely to be the last train out of town on Medicare changes for a while,” Kahn said. “That's why this was a train that has a lot of cars between the engine and the caboose.”

Most political observers believe the Republican-controlled House and the Democratic-controlled Senate will hold their noses and back the measure. The biggest wildcard is Wyden, who wasn't a party to the bi-partisan deal that was reached last month to permanently fix the Medicare reimbursement problem. It's widely anticipated that Wyden will still bring forth his own bill to pay for a permanent doc fix, but ultimately acquiesce to the deal that's been cooked between Boehner and Senate Majority Leader Harry Reid.

“It's kind of like the 12 stages of grief,” said Dean Rosen, a partner with the lobbying firm Mehlman Vogel Castagnetti, and previously a top GOP staffer on healthcare issues. “You have to go through them to get to the end.”

Eric Zimmerman, a partner with McDermott Will & Emery, points out that it's significant that the extension is for 12 months. That means it extends beyond November's elections and could lead to a shakeup among the key players. For instance, House Taxes Chair Dave Camp (R-Mich.) faces term limits and isn't expected to maintain that influential post in 2015.

“If history is any guide, they won't deal with this until the deadline is looming,” Zimmerman said. “That makes the future of the whole SGR repeal quite a bit more murky.”

Follow Paul Demko on Twitter: @MHpdemko

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