Senate Majority Leader Mitch McConnell, R-Ky., last week vowed quick action on bipartisan legislation to replace the Medicare physician sustainable growth rate (SGR) formula when the Senate reconvenes on April 13. The AHA and hospital leaders also are calling for speedy action.

“We’ll turn to it very quickly when we get back,” McConnell told Capitol Hill reporters shortly before lawmakers left Washington. “I think there’s every reason to believe it’s going to pass the Senate by a very large majority.”

After working into the pre-dawn hours of March 27 to pass a fiscal year (FY) 2016 budget resolution, Senate leaders decided to wait until after Congress’ two-week spring recess to act on the SGR legislation, H.R. 2, the “Medicare Access and CHIP Reauthorization Act.” The House March 26 approved the legislation, which includes a two-year extension of the Children’s Health Insurance Program.

SGR Conference

Physicians were slated to receive a 21% cut on April 1, when the latest SGR payment patch expired. But the Centers for Medicare & Medicaid Services (CMS) delayed processing the payments. (Read the agency’s announcement by clicking on:

The legislation would increase payments to physicians by 0.5% annually for the next five years, as well as award a 5% bonus to providers, who accrue at least a quarter of Medicare reimbursements under alternative value-based payment models, such as patient-centered medical homes, between 2018 and 2019.

H.R. 2 would cost about $210 billion, with about $70 billion of that amount offset through savings from providers and beneficiaries. The offsets would come from cuts to hospitals and post-acute-care providers, income-related premium adjustments in what higher-income beneficiaries pay for their Medicare prescriptions and doctors’ visits, and instituting reforms in Medigap coverage.   

In a March 26 letter, AHA President and CEO Rich Umbdenstock urged senators to approve the bill.

“While we are disappointed that hospitals would be looked to as an offset given that Medicare already pays less than the cost of delivering services to beneficiaries, the package strikes a careful balance in the way it funds the SGR repeal and embraces a number of structural reforms to the Medicare program,” he wrote. “We commend the Senate Republican and Democratic Finance Committee leadership on their design of the reform of Medicare physician payment in this package, and urge the Senate to pass it.”

The bill helps offset the costs of the SGR repeal by adjusting inpatient hospital payment rates. It would phase in coding adjustments – mandated under the 2013 “No Budget, No Pay Act” – to hospital payments to achieve some $15 billion in savings over 10 years.  Cuts to post-acute care providers – through a 1% market basket update in FY 2018 – are expected to generate $15.4 billion in savings over a decade.

The legislation would delay by an additional year – to FY 2018 – the start of scheduled annual Medicaid reductions to hospitals that treat a disproportionate share of low-income patients; and would extend several important provisions under the Medicare program, including the Medicare Dependent Hospital (MDH) program, the low-volume hospital adjustment program, the therapy cap exceptions process, and ambulance and home health add-ons.

Also, the legislation would delay partial enforcement of Medicare’s two-midnight policy through the end of this fiscal year, meaning that CMS would not conduct post-payment patient status reviews for claims with dates of admission from Oct. 1, 2013, through Sept. 30, 2015. The enforcement ban was to expire on March 31, but CMS on April 1 extended it through April 30.  

And H.R. 2 would eliminate the statutory barrier to “gainsharing programs,” which encourage hospitals and physicians to collaborate and improve patient quality of care and reduce unnecessary spending in hospital services. The providers share among themselves the savings realized from the efficiency measures implemented by these programs. 

In calling on the Senate to pass H.R. 2, the AHA noted that the legislation rejects a number of potential cuts to hospital funding, such as outpatient hospital services, Medicare bad debt payments, graduate medical education, critical access hospitals and certain services provided in rehabilitative hospitals. In addition, the bill would not delay implementation of the ICD-10 coding program.

The legislation would also consolidate various reporting programs, such as the Meaningful Use program for electronic health records and several quality reporting programs.

The AHA March 31 sent hospital and health system leaders an Action Alert urging them reach out to their senators and urge them to vote for H.R. 2. 

On March 24, the association sent its members a Special Bulletin with details about the legislative provisions in H.R. 2.