House Passes HR 3961 — Legislation to Permanently Repeal the SGR (Nov. 19, 2009)
FROM CMA:
The U.S. House of Representatives passed HR 3961, a bill that would repeal the current Medicare Sustainable Growth Rate (SGR), the formula that calls for annual cuts in Medicare physician payments. The 243–183 vote was largely on party lines.
HR 3961 would repeal the SGR and replace it with two new spending targets, one for primary care and one for all other services. Physician payment rates under the new formula would track the gross domestic product, plus annual increases of 2% for primary care services and 1% for all others. The new spending targets would be rebased every five years so that any future projected cuts will be removed.
It is important to note that President Obama, in partnership with congressional leaders, agreed to take the cost of the drugs administered in physician offices out of the SGR funding target. In the 2010 Medicare physician payment rule, these drugs were moved from Medicare Part B to the Part D prescription drug program, at a cost of $100 billion, which represents a significant portion of Part B spending. With these costs removed from the SGR spending target, physician spending is much less likely to hit the targets that trigger payment cuts.
The repeal of the SGR and the new spending targets in HR 3961, combined with the administrative removal of physician-administered drugs from Medicare Part B, equate to more than $300 billion in physician payment fixes. Together they will create a more stable system for updating physician payments going forward.
CMA does not view these new SGR targets as the long-term solution. Congressional leaders have committed to work with organized medicine to develop a longer term fix to the fee schedule beyond the 1–2% updates in future years. By repealing the current SGR and its more than 40% physician payment cuts, we can move forward and focus our energy on developing a better long-term payment system.
The House also passed its larger health reform bill earlier this month, HR 3962, which contains additional Medicare reforms. These reforms include an additional 5% Medicare primary care increase and a California GPCI fix.
For more information, see CMA's Medicare SGR Issue Brief.
The focus now shifts to the Senate, which is expected to take an important procedural vote as early as Saturday that would clear the way for a floor vote on the Senate health reform bill. CMA is still reviewing the details of the bill, which was unveiled late Wednesday evening. Stay tuned for more details.
Additional details can be found in CMA's Health Reform Resource Center.
FROM AMA:
By a vote of 243–183, the U.S. House of Representatives passed HR 3961, a bill that repeals the current Medicare physician payment formula, known as the sustainable growth rate (SGR), and replaces it with a new framework. Michael Burgess, MD, (R-Texas), a former AMA alternate delegate, was the sole Republican to vote for final passage.
This legislation would replace the SGR with a new formula that creates two updates: GDP +2 for Evaluation and Management services and GDP + 1 for other services. Additional technical changes will avoid the accumulation or compounding of debt that occurred with the SGR formula.
House Speaker Nancy Pelosi (D-Calif.), House Majority Leader Steny Hoyer (D-Md.), House Committee on Ways and Means Chairman Charles Rangel (D-N.Y.), House Ways and Means Health Subcommittee Chairman Pete Stark (D-Calif.), House Committee on Energy and Commerce Chairman Henry Waxman (D-Calif.), Rep. Frank Pallone (D-N.J.), the bill's sponsor Rep. John Dingell (D-Mich.), and the Obama Administration were strong advocates for passage of HR 3961.
House Republican leadership offered a last-minute alternative that would have provided for 2% updates over the next four years, reverting back to the SGR and steep cuts. Also, it would have offset the cost with medical liability reforms modeled after California and Texas laws. AMA opposed the motion to recommit because we do not support any temporary "patches" for the SGR. A permanent repeal is long overdue. The motion to recommit with medical liability reform provisions was ruled non-germane. A second GOP alternative providing for a two-year "patch" was defeated by a vote of 177–253.
The battle now shifts back to the Senate. While action to permanently repeal the SGR was blocked in the Senate in October, the Obama Administration and several senators support a permanent replacement of the SGR formula. The health system reform bill released by Senate Majority Leader Harry Reid (D-Nev.) provides for a one-year reprieve with a steeper cut in 2011. AMA does not support temporary patches that further grow the problem.
No one expects Congress to allow the 21% cut scheduled for January 1, 2010, to occur. We regret that Congress has deferred action until the "eleventh hour." AMA will redouble our efforts in the Senate and with the Obama Administration to achieve a permanent solution.