House GOP seals deal on end of full SGR repeal

Without bi-partisan agreement on how to pay for a full repeal of the near universally reviled sustainable growth rate (SGR) formula that would cut Medicare physician reimbursement by about one fourth starting on April 1, House Republicans posted a one-year SGR fix to the Rules Committee website three minutes before midnight last night. The new bill also delays ICD-10 implementation until Oct. 1, 2015.

The 121-page bill, which is as yet unnumbered, was introduced under a suspension of the House rules. That means that debate on the bill is shortened, but it will need a two-thirds majority to pass.

There is broad support from representatives of both parties for repealing the SGR formula, and for more than 15 years, Congress has consistently passed temporary legislative fixes to keep the formula from being applied to Medicare physician payments. To decrease the odds of opposition from all but the most fiscally conservative members of the House, the new year-long SGR fix is exempt from Congress’ usual “PAYGO” scorecard and does not include Federal budget cuts to offset the cost of the temporary fix. Disagreement between Republicans and Democrats over how to pay for the permanent SGR repeal is what led to that effort getting bogged down and the need for another temporary fix.

The House may vote on the one-year SGR delay bill on Thursday and send it immediately to the Senate for a vote that same day. Congress is not scheduled to be in session on Friday or Monday, and legislators will be eager to get back to their home districts for the four-day weekend. This could add a little more push to approving the temporary fix quickly despite the impact it will have on the deficit as members will not want to risk their leaders forcing them to stick around D.C. until they fix the SGR.

With a one-year fix all but certain, the effort to permanently repeal the SGR will continue into next year and come to a head in March of 2015. Part of what made passing a permanent repeal this year so attractive was that a decrease in Medicare utilization rates had dropped the non-partisan Congressional Budget Office (CBO) estimated cost of a permanent SGR repeal to the bargain basement price of around $138 billion. While this is not small change, the CBO’s estimate for the price for a permanent SGR repeal had been nearly double that amount a few years ago.

Health economists are divided over whether this price will last. Some of the decrease in Medicare utilization may have been due to the recession, and as the economy recovers, use of health services should rise again and cause a corresponding increase in CBO estimates for the cost of a permanent SGR repeal. However, there have also been some fundamental changes in the U.S. healthcare system in the past few years that could mean a more lasting slow down in healthcare spending. If these changes, and not the recession, are the primary drivers of slowing healthcare spending, the lower SGR repeal price may last into 2015 and beyond.

The American Medical Association (AMA) and scores of other state and specialty groups that represent physicians had recognized the risk that the lower SGR repeal price might not last and made a permanent SGR repeal their top legislative priority in the past year. However, the AMA dropped out of supporting the House permanent SGR repeal bill after House Republicans changed its language to include a provision to pay for the SGR repeal and associated modest physician payment increases with a five-year delay in the Patient Protection and Affordable Care Act’s individual mandate for buying insurance. (Read more here.) They continue to support other bills, including the Senate Democrats version of the permanent SGR repeal, that do not tie the SGR repeal to a delay in the individual mandate.