American Society of Hematology

Congress Reopens Federal Government; Physician Payment Reform on Congressional Agenda

Published on: October 24, 2013

A permanent or temporary fix to the Sustainable Growth Rate (SGR) formula to prevent a reduction in physician fees in 2014 took a back seat to Congress’ deliberations on whether or not to reopen the government and raise the debt ceiling.  On October 16, Congress finally reached an agreement and the President signed legislation to end the budget impasse and fund federal agencies and programs – including the National Institutes of Health (NIH) – through mid-January.  This followed a more than two-week federal government shutdown which occurred after Congress failed to pass a short-term continuing resolution (CR) to keep the government operating through the start of the new fiscal year that began October 1, because of a partisan battle over funding for the Affordable Care Act.  Under the bipartisan compromise, the government – including NIH – will be funded at current levels through January 15, 2014, and the nation’s debt limit will be extended through February 7, 2014. 

Following the October frenzy, Congress is now able to address a number of pending issues including Medicare physician payment reform.  The current Conversion Factor (CF) (the monetary index multiplied by the relative value units of each CPT Code to determine Medicare payment), which expires on December 31, 2013, is $34.0230. Without congressional action, the CF will be reduced on January 1, 2014 by approximately 25 percent to $26.8199 due to the cumulative reduction in the update from the Sustainable Growth Rate (SGR) formula. If the SGR reduction is prevented but changes included in the proposed 2014 Medicare Physician Fee Schedule occur, the anticipated CF would be $35.6653.

Earlier this year, signals looked good for Congress to pass legislation to finally repeal the SGR formula and replace it with stable payment updates for five years. Members of Congress on both sides of the aisle were frustrated with the last minute fixes that they would pass at the end of the year and recognized that the short-term fixes were adding to the cost of repealing the SGR. In addition, the Congressional Budget Office revised its estimate for the cost to repeal the SGR formula permanently and replace it with a freeze in the conversion factor at $138 billion over 10 years. This was significantly less than previous estimates and provided motivation to congressional committees to draft and approve legislation repealing the SGR.

On July 31, the House Energy and Commerce Committee approved the Medicare Patient Access and Quality Improvement Act of 2013 (H.R. 2810) by a unanimous vote. The legislation would repeal the SGR, provide for a 5-year period of annual payment updates set at .5 percent, and initiate a quality performance system in 2019. The Congressional Budget Office estimated a higher cost of the Energy and Commerce Committee’s legislation at $176 billion over 10 years due to the increase rather than a freeze in fees, as well as the pay for performance provisions. The legislation builds on proposals that House Republican leadership released earlier this year. ASH submitted comments on the proposal in April, additional feedback to the Energy and Commerce Committee in May, as well as additional comments in July.   ASH’s comments and recommendations urged Congress to repeal the sustainable growth rate and replace it with a quality-based payment system, which includes predictable payment rates for at least five years.

In addition to the Energy and Commerce Committee moving its bill forward, the House Ways and Means Committee and the Senate Finance Committee also have jurisdiction over the Medicare program and have held hearings and have been working on legislation to permanently repeal the SGR. In May, Senate Finance Committee leaders sent a letter to ASH requesting feedback on how to reform Medicare physician payment. The Committee also noted its interest in identifying alternative payment models that focus on volume control and performance incentives. In response, ASH submitted comments to the Senate Finance Committee reiterating the Society's message to repeal the SGR formula and replace the current payment formula with predictable payment rates for at least five years. The Society also urged the Committee to consider a new payment system that would improve the value of cognitive services, reinstate Medicare reimbursement for consultations, and utilize initiatives such as ABIM Foundation's Choosing Wisely® Campaign to reduce Medicare spending.

At this time it is impossible to predict whether a permanent repeal of the SGR will be enacted by the end of the year. In fact, many are concerned that even a temporary solution in this caustic environment will be difficult. The three committees with jurisdiction over Medicare have talked about moving a separate bill that will prevent the scheduled 2014 physician fee cut along with Medicare amendments to provide sufficient savings to cover the cost of freezing or providing a slight increase in fees. But, Congress could also move a broader budget bill later this year and include in it the “SGR fix.” At present, neither the process nor the outcome is clear.

Participants in the ASH Advocacy Leadership Institute met with congressional offices on October 23 to advocate for a repeal of the SGR formula and appropriate and stable Medicare physician reimbursement.  With the Congressional clock ticking, ASH clinicians are also strongly encouraged to join the Society's on-line advocacy campaign urging Congress to repeal the current payment formula and replace it with a predictable and stable payment system.

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