Senate Approves Historic Sustainable Growth Rate Repeal Bill
Senate’s Quick Approval Avoids Physician Payment Cuts
On April 14, the U.S. Senate overwhelmingly approved a House bill to permanently repeal the Sustainable Growth Rate (SGR) payment system. Although the bill still needs President Obama’s signature, he has indicated that he will sign the bill, ending years of political debate and gridlock over physicians' Medicare payments.
This legislation represents the largest health care expenditure since the passing of the PPACA in 2010. However, the Congressional Budget Office indicated the passage of the bill is cheaper than keeping the system as it was because that would cost approximately $900 million more over the next 10 years.
The timing of the bill passage was crucial. Although the SGR system payment cuts went into effect April 1 and ushered in a 21% decrease in Medicare Part B payments, the Centers for Medicare and Medicaid (CMS) were able to hold the processing of claims for this two-week period, effectively avoiding the decrease in fees paid to providers. The new structure is based upon dual payment tracks, guiding physicians to move more of their patients into risk and value-based payment models. Projected increases to physicians who adopt the new risk-based tract will start in 2019.
The bill does not only impact Medicare Part B fees; the new legislation also includes the following:
- Extends the Disproportionate Share Hospital payment policy through 2025 while delaying the DSH cuts to certain hospitals until 2018.
- Delays the two-midnight rule on inpatient payment determination until September 30, 2015.
- Extends the Children's Health Insurance Program (CHIP) by two years through September 30, 2017.
- Allocates $7.2 billion in additional funding for community health centers.
- Permanently extends Medicare’s low income premium assistance program for seniors.
Stay tuned for more information regarding the new legislation as the CMS releases further interpretations.