House unveils details of permanent SGR fix, but hurdles remain

Congressional leaders this week released details on their bipartisan plan to permanently repeal the unpopular Sustainable Growth Rate (SGR) formula.

After several years of short-term patches to prevent cuts in physician reimbursements, legislators unveiled a $210 billion proposed permanent fix last week. Healthcare industry groups heavily lobbied for Congress to devise a permanent fix, with the American Hospital Association (AHA) endorsing the House bill in a letter to House members this week.

"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," wrote AHA President and CEO Rich Umbdenstock.

In addition to repealing the SGR formula, the legislation would implement 0.5 percent annual payment increases over the next five years, as well as award a 5 percent 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.

Despite this progress, the legislation still faces hurdles, according to McClatchy DC. Conservative Republicans object to the fact that the bill proposes only $70 billion in other revenues to offset the costs. "At that the same time we're saying as Republicans that we're going to balance the budget in 10 years, we're going to add $120 billion, $130 billion to the deficit, and that seems incongruous to me," said Rep. Raul Labrador (R-Idaho). "I'm trying to figure out how this is a good deal."

Moreover, if the bill does not pass the House and Senate before a two-week recess beginning Friday, Congress will likely have to pass yet another short-term patch to prevent cuts set to take effect on April 1 when last year's patch expires, The Hill reports.

Meanwhile, the Committee for a Responsible Federal Budget, a nonprofit that lobbies to lower the national debt, argues against a permanent fix. "[The SGR] doesn't work as intended, it's a little bit silly in some ways and it's a lobbying bonanza," Research Director Loren Adler told Bloomberg. "That being said, it's accomplished what was intended--it's controlled the cost of Medicare."

To learn more:
- here's the bill (.pdf)
- read the AHA letter (.pdf)
- check out the McClatchy article
- here's the Hill article
- read the Bloomberg article