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Senate Approves Bill to Repeal SGR

Last-minute vote avoids 21% pay cut for Medicare doctors

Congress has approved a bill to repair the formula for reimbursing Medicare physicians, marking a rare bipartisan achievement just in time to head off a 21% cut in the doctors' pay.

Final action came as the Senate voted 92 to 8 to approve the so-called “doc fix.” The House of Representatives had acted more than 2 weeks ago. The bill now goes to President Obama, and he is expected to sign it into law.

The measure, drafted last month by Republican House Speaker John Boehner and Democratic Minority Leader Nancy Pelosi, was hailed as the first major legislative accomplishment of the 2015–2016 Congress, suggesting some progress toward easing years of gridlock on Capitol Hill.

The new bill replaces a 1990s formula –– the Sustainable Growth Rate (SGR) –– that linked Medicare doctors’ pay to economic growth with a new formula more focused on quality of care. It also would require means-testing of Medicare beneficiaries so that higher-income people pay higher premiums.

One of the government’s largest social safety-net programs, Medicare is health insurance that serves 54 million elderly and disabled people.

The old formula for paying Medicare doctors has been a problem for years as health care costs outpaced economic growth. Congress had repeatedly addressed the problem with a long series of temporary “doc fix” patches. The new formula is intended to be a lasting change. A recent Centers for Medicaid & Medicare Services report, however, casts doubt about the bill’s value as a long-term solution to physician reimbursement problems and indicated that Congress will likely have to pass further legislative “fixes” in the future.

The federal government warned Congress last week that it must act before April 15 or thousands of Medicare physicians nationwide would face a 21% pay cut under the old reimbursement formula. The deadline for action had been April 1, but because Medicare doctors’ claims generally take at least 14 days to be paid by the government, the pay cuts were not expected to be implemented before April 15.

The measure passed the House overwhelmingly in late March by a vote of 402 to 12, but because it expands the federal deficit, it was greeted skeptically by deficit hawks in the Senate. They labeled the bill irresponsible because it would add an estimated $141 billion to the U.S. debt over the next 10 years, according to the Congressional Budget Office.

But an amendment sponsored by Senator Mike Lee (R-Utah), requiring Congress to find ways to pay for the “doc fix” by the end of this year, failed to pass on a vote of 42 to 58.

The new legislation includes a 2-year extension of the Children’s Health Insurance Program (CHIP) for low-income children and a 2-year extension of funding for community health centers. Both were high priorities for Democrats, and they tried to extend them to 4 years, but their amendments failed. They also tried to take out some anti-abortion language, but those amendments also failed.

Health care groups were leaning hard on the Senate to approve the measure, and Senate Majority Leader Mitch McConnell (R-Kentucky) argued for approval, noting that the bill included more means testing of Medicare beneficiaries.

Boehner also urged the Senate to pass the House bill, saying the House had no intention of acting again on the measure if the Senate amended it.

Sources: Reuters; April 14, 2015; and FierceHealthcare; April 14, 2015.

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