The perennial battle over Medicare payments to doctors is about to surface on Capitol Hill once again and the outcome is likely to be the same as in previous years—a temporary patch.
The current “doc fix” expires at the end of March. If Congress fails to take action, physicians will face a 21.2% decrease in payments for treating Medicare beneficiaries—a prospect that's viewed as untenable by partisans of all stripes.
Prospects for a permanent fix to Medicare's sustainable growth rate formula before the end of the month are slim to non-existent, according to lobbyists and congressional staffers who track the issue.
Last year, negotiators reached a bicameral, bipartisan accord on scrapping the hated payment scheme. But that pact collapsed because there was no agreement on how to pay for the roughly $130 billion fix. The financial task has now become more difficult, with the Congressional Budget Office adding roughly $40 billion to the price tag over a decade.
“It's pretty clear that we're going to get some kind of a patch,” said Dean Rosen, a partner with the lobbying firm Mehlman Castagnetti Rosen Bingel & Thomas. “The only question is, how long is it going to be?”
That patch would be the 18th straight short-term doc fix. Speculation on the length of the patch runs anywhere from two months to the end of 2016, which would kick the SGR can past the next presidential election.
But most informed observers are focused on a shorter-term fix in the three- to six-month range. That would provide a window for Republican congressional leaders to work on a permanent repeal package.
“There clearly is a lot of sincere intention to have a longer-term fix at some point this year,” said Rosen, who previously served as the top healthcare staffer for former GOP Senate Majority Leader Bill Frist.
Congressional staffers echo that view. “It is clear that the ranking members and the chairmen are on board for what we have been calling the base agreement,” said a senior House staffer close to the issue. “We all still think this is the right answer.”
A six-month extension also would push the deadline beyond June, when the Supreme Court is expected to rule on the King v. Burwell case challenging premium subsidies in up to 37 states that haven't established their own health insurance exchanges. If subsidies are struck down, the SGR could potentially become part of a broader discussion about fixes to the Affordable Care Act.
But the immediate agenda on Capitol Hill will almost certainly include passing another patch. A six-month fix would cost in the neighborhood of $10 to $12 billion. The bulk of that money is likely to come from extending Medicare cuts that were part of the sequestration deal, as well as extending cuts to Medicaid's Disproportionate Share Hospital payments, according to lobbyists and staffers working on the issue.
One wild card is whether reauthorization of the Children's Health Insurance Program becomes part of the deal. That program is set to run out of money at the end of September and there is bipartisan support for extending it. States would like to see that happen soon because many of them are in the process of drafting budgets for the fiscal year that begins July 1.
“They're saying you can't leave us hanging until September,” said Anne Phelps, U.S. healthcare regulatory leader at consulting firm Deloitte. “That's way too late.”
But the issue has become entangled in partisan politics. Last month, Sen. Orrin Hatch (R-Utah), chair of the Senate Finance Committee, and Rep. Fred Upton (R-Mich.), chair of the House Energy and Commerce Committee, released a proposal to extend CHIP funding. That plan has drawn fire from left-leaning groups such as the Center on Budget and Policy Priorities for reducing benefits and shifting costs to the states.
“It has added more partisan tension to the discussion than I think probably either side would have hoped,” said Billy Wynne, a partner with lobbying firm Thorn Run Partners, who works on healthcare issues. “It hasn't helped bring the parties together to get a final deal done.”
A GOP Senate staffer involved in the issue said Republicans are running a risk by letting the SGR deadline get so close without notifying their Democratic counterparts about what they plan to propose. As a result, they could see Democrats demand a clean CHIP reauthorization in return for their votes as the clock winds down. “How much of a game is going to be played there is unclear,” the Senate staffer said.
In recent years, SGR-patch legislation also has become an attractive vehicle for other policy proposals because it's one of the few healthcare bills guaranteed to gain traction. Last year's package, for example, included an implementation delay in the ICD-10 coding system for Medicare payments.
But most healthcare watchers are expecting a relatively clean bill to emerge, given the small window for action. Any extraneous policy proposals could clog the prospects for timely passage.
“New policy is not something that they're interested in at this point,” said Joel White, president of the Council for Affordable Health Coverage, a business-backed advocacy group.
Despite the potential legislative potholes, most healthcare policy watchers expect a deal will come together on an SGR patch before the March 31 deadline. “It gets done,” White said. “It's just, what does it look like?”
The prospects for a longer-term deal remain much more uncertain. That's in large part because of questions about how to pay for it. The thumbnail dynamic is that most Republicans believe a permanent doc fix needs to be offset by spending cuts, while many Democrats don't think that's necessary.
“I believe the majority of the majority [Republicans] believe that the majority of it has to be paid for,” Rosen said.
Which means, Wynne noted, that the odds of a permanent fix remain remote. “It's always safe to bet against permanent SGR repeal,” he said.
Follow Paul Demko on Twitter: @MHpdemko
