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Capitol Hill Report: Special Edition

March 31, 2014

by Michael J. Amery, Esq., Legislative Counsel

After High Hopes for Fix, Congress Passes 17th SGR Patch
First, a thank you. Thank you to the 1,071 members who responded last week to the AAN's Action Alerts asking you to contact Congress to support a permanent, not a temporary, solution to the Sustainable Growth Rate formula. AAN members sent more than 2,000 messages to Congress over a five-day period. Those messages were heard by members of Congress who said their offices were flooded with emails urging them to support a full repeal of the SGR formula. That's the good news.

Even with a strong grassroots effort and a unified voice representing most of the physician community, Congress still failed. In spite of the support of the vast majority of the physician community, the House leadership—both Republicans and Democrats—used an unusual procedural move to pass a temporary 12-month SGR "patch" on a quick voice vote when very few members of Congress were present. (You can watch the 32-second video here.) The Senate followed suit on Monday after failing to get support for its permanent repeal bill. Unfortunately, passage of this short-term patch effectively ends the months and months of work done to develop bipartisan, bicameral legislation to permanently repeal the SGR. This is a major blow to everyone involved.

The breakdown of agreement came down to fundamental differences in opinion over how to pay for the cost of repeal. At the end of the day, the leadership on both sides refused to work out a compromise. We always knew this would be the hardest part, but that doesn't make the outcome any easier to accept. Members of Congress were elected to make tough decisions, and they have decided to pass the buck to the next Congress.

The AAN strongly opposed this last minute effort to pass a patch instead of working through the final phase of negotiation on a permanent solution. We signed on to this letter along with 89 other medical specialties and states.

What You Need to Know About the Patch
The legislative package passed averts the pending 24.1-percent cut in Medicare physician payments for the next year. This means that the 0.5-percent increase that has been in effect since the start of the year will remain in place. However, beginning January 1, 2015, payment rates will be frozen at the 2014 rates until the patch expires on March 31, 2015.

Notably, this bill uses the "Misvalued Codes" section from the defeated permanent repeal bills estimated to achieve $4.9 billion in savings. In the permanent repeal package, any savings would have been redistributed in a budget-neutral manner within the physician fee schedule. In this bill, the $4.9 billion will be removed from the physician "pool." This is happening because all of the "low hanging fruit" offsets have been used on previous patches. The funding of the current patch is the start of a tricky road of ever-harder offsets.

Other notable provisions of HR. 4203 include:

  • A 12-month extension of the geographic adjustment (GPCI) "floor" of 1.0 for physician work in the Medicare fee schedule
  • Delay of the implementation of the ICD-10 diagnosis coding set until October 1, 2015
  • The Secretary of Health and Human Services would have discretion to continue suspending RAC post-payment audits under the "Two-midnight" policy through March 2015
  • Revises the laboratory fee schedule based on market-based private sector rates
  • Adjusts payments for CT equipment that does not meet certain dosage standards and implements appropriate use criteria for advanced imaging services
  • In 2024, adjustments to sequestration's physician cut would increase to 4 percent for the first six months, followed by zero percent for the second six months; this is done to amplify the impact of the cut and generate more savings

Several of these provisions are entirely new and will take some time to understand fully—we'll keep you updated as we learn more and develop resources.

Final Thoughts
We are, of course, thankful that the SGR cut is not going into effect. It shows the strength of the physician community that has worked together for more than a decade to avoid cuts that would impact access to care. Congress continues to listen and respond to our concerns.

But the disappointment cannot be ignored. Everyone agrees that we were so close. There are some that say this patch gives Congress more time to sit down and negotiate offsets for the full cost of a SGR repeal. Physician members of Congress like Michael Burgess (R-TX), Phil Roe, (R-TN), and Phil Gingrey (R-GA) assured me and other physician specialty representatives that they would continue working on a final solution. I appreciate their commitment and hope, but I am not sure I share it as Election Day 2014 nears.

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