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Concerns remain after introduction of SGR replacement bill

March 19, 2015
by Lois A. Bowers, Senior Editor
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Senate and House leaders have introduced bipartisan, bicameral legislation to replace the Medicare sustainable growth rate (SGR) formula tied to physician compensation with a payment system that, they say, is designed to reward quality, efficiency and innovation. At least one organization representing aging services providers, however, is expressing concerns related to Medicare therapy caps and payment cuts to providers of post-acute care.

Larry Minnix, president of LeadingAgeThe bill seeks to end the cycle of annual “doc fix” crises that have created uncertainty for millions of Medicare providers and beneficiaries for more than a decade and create a system that promotes higher-quality care for older adults. LeadingAge President Larry Minnix, however, says that preliminary reports indicate that the legislation will not fully repeal the caps on Medicare coverage of outpatient therapy that were part of a 1997 attempt to curtail the growth in Medicare spending.

“Like the SGR for physician payment, the therapy caps have been in effect only once, for a period of a few weeks, and have never saved any money,” Minnix said in a statement. “If the caps now are imposed on Medicare beneficiaries, they will lead to untold suffering, increased hospitalizations, and huge out-of-pocket costs for elders who have experienced serious illnesses and injuries.” LeadingAge supports repealing the caps and replacing them with a referral system, he added.

LeadingAge also is concerned that the proposed “doc fix” would by partially offset by additional reductions in payments to post-acute care providers.

“Our sector already has to contend with reduced market basket updates under the Affordable Care Act, two percent Medicare sequestration scheduled to last until 2024, reduced reimbursement for bad debt largely attributable to states’ refusal to cover dual eligibles’ patient responsibility payments, an 11 percent across-the-board cut in payments to skilled nursing facilities and the rebasing of home health reimbursement,” Minnix said. Additonal Medicare savings in post-acute care already will be realized by value-based purchasing for skilled nursing facilities and the IMPACT Act enacted by Congress in 2014, he added. “Enough is enough.”

Greg Crist, senior vice president of public affairs for the American Health Care Association, told Long-Term Living: “We are hopeful the House can come to agreement on a permanent fix, preferably one that doesn’t cut skilled nursing centers. These next few days will involve tense negotiations, and we are here to help in any way we can.”

The SGR legislation introduced today, which is nearly identical to bills introduced in the House and Senate last year, was introduced by Rep. Michael C. Burgess, MD (R-TX), Senate Finance Committee Chairman Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Fred Upton (R-MI), House Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ), House Energy and Commerce Health Subcommittee Chairman Joe Pitts (R-PA), House Energy and Commerce Health Subcommittee Ranking Member Gene Green (D-TX), House Ways and Means Committee Chairman Paul Ryan (R-WI), House Ways and Means Committee Ranking Member Sander Levin (D-MI), House Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX), House Ways and Means Health Subcommittee Ranking Member Jim McDermott (D-WA) and Rep. Charles Boustany, MD (R-LA). They say the proposal would:

  • Repeal the SGR and end the annual threat to care for Medicare beneficiaries while instituting a 0.5 percent payment update each year for five years.
  • Streamline Medicare’s existing quality programs into one value-based performance program.
  • Incentivize the use of alternative payment models in an effort to encourage physicians and other providers to focus more on coordination and prevention to improve quality and reduce costs.
  • Give beneficiaries more access to information and supply physicians with data to improve care.