Negotiations between House Speaker John Boehner and Minority Leader Nancy Pelosi on a permanent “doc fix” are fueling cautious optimism even among some jaded veteran observers of past sustainable growth-rate formula skirmishes.
"We've been taking them seriously for over a week now,” said one lobbyist tracking the issue, speaking on background.
The Boehner-Pelosi negotiations are focusing on finding a permanent way to eliminate Medicare's widely loathed SGR formula for paying doctors.
But the Senate remains on the sidelines in these talks. And the issue of funding a permanent fix, to the tune of $175 billion, still has many saying just expect another temporary patch—likely lasting somewhere between two and nine months—before the March 31 deadline to do something arrives.
“I think the most realistic outcome at this point is that they don't get there by March 31,” said Stephen Northrup, a partner in the Rampy Northrup lobbying firm, and a former GOP healthcare staffer. “Then the question becomes what do they do?”
If legislators don't take action, doctors would be facing a 21.2% decrease in payments on April 1, a prospect that both Republicans and Democrats find untenable. Congress has passed 17 consecutive short-term fixes—and most healthcare policy watchers expect that to happen again.
The chief impediment to a permanent solution is money. The current legislative proposal to eliminate SGR would cost roughly $175 billion over a decade, according to the Congressional Budget Office. Last year, legislators agreed on a bipartisan, bicameral plan to permanently repeal the Medicare payments scheme, but the deal collapsed because there was no agreement on how to pay for it.
“I'm not optimistic that we'll see a permanent fix this month,” said Eric Zimmerman, a partner with McDermott Will & Emery. “I think it's more likely that we're looking at another short-term patch.”
Further muddying matters is that the Senate hasn't been directly involved in the negotiations over a permanent fix. That means any accord reached by Boehner and Pelosi would be subject to ratification by their Senate counterparts.
"The negotiations are strictly between” Boehner and Pelosi, said another lobbyist, speaking on background. "They've been keeping Reid and McConnell in the loop throughout this process.”
Sen. Ron Wyden (D-Ore.), the ranking member of the Finance Committee, expressed support for the House process on Wednesday. “I've been in Congress long enough to be skeptical of rumors, but what we are hearing from the House suggests there is real movement to fully repeal and replace the flawed formula for paying Medicare providers known as SGR,” Wyden said in a statement.
Another wild card is the Children's Health Insurance Program, which is set to expire at the end of September. State officials are clamoring for an earlier resolution since many of them have to enact budgets for fiscal years that begin July 1. The program has bipartisan support, but Republicans are seeking changes that would lower the cost and shrink benefits. Democrats could insist that any SGR deal include a straight-up CHIP reauthorization.
Republicans have typically insisted that a doc fix must be largely offset by corresponding reductions in other areas of healthcare spending. Democrats, by contrast, are generally less adamant that any changes to SGR need to be paired with corresponding cuts.
Reaching anything approaching $175 billion in spending reductions almost certainly means some kind of structural changes to Medicare benefits. That could entail collapsing Medicare Parts A and B or hiking costs for wealthier beneficiaries, both of which are ideas that have been floated by the Obama administration.
“I don't see any other way they get to the price tag for full repeal,” said Julie Scott Allen, senior vice president with the District Policy Group at Drinker Biddle & Reath.
But typical legislative dynamics could be shifting in the quest for a deal. Boehner's notoriously fractious caucus has repeatedly undermined his efforts to negotiate across the aisle in recent years. That makes his ability to bring his caucus aboard on any bipartisan plan suspect.
“That might have worked 10 years ago,” Northrup said. “Now you have a conference that has anywhere from 30, 40 members that are automatically skeptical of anything that comes out of their leadership.”
Boehner has displayed a willingness, when under duress, to bring forward legislation that can only pass with a majority of support coming from across the aisle. Most recently, he averted a partial shutdown of the Department of Homeland Security by passing a clean funding bill with mostly Democratic votes. That might ultimately prove the only path to a permanent doc-fix deal.
Follow Paul Demko on Twitter: @MHpdemko