The Unlikelihood of Permanent SGR Reform During the Lame-Duck Session

Ken Perez
Ken Perez

Guest post by Ken Perez, vice president of healthcare policy, Omnicell.

“Hope springs eternal” is a phrase from Alexander Pope’s An Essay on Man: Epistle I, written in 1733. For some reason, right now hope is in full bloom in Washington, D.C. for physician groups, such as the American Medical Association and the Medical Group Management Association, which are pushing for passage of a permanent repeal of the sustainable growth rate (SGR), also known as a “doc fix,” prior to the congressional recess that will start in mid-December.

The points that are being made by physician groups are not new. There is the spectre of a 21.2 percent reduction in Medicare physician fees effective April 1, 2015, when the current doc fix expires, and nobody wants such a drastic reimbursement rate cut to occur. Also, because of moderating healthcare costs, the most recent Congressional Budget Office estimate of the cost of holding payment rates through 2024 at current levels is “only” $131 billion, near the low end of the CBO’s historical range. And last, earlier this year, a number of permanent SGR reform bills enjoyed bipartisan and bicameral support.

In spite of all these valid points, the case for fixing the SGR this calendar year, as opposed the first quarter of 2015, does not seem compelling or possible, due to both political and fiscal realities.

Politically, as the name implies, lame-duck congressional sessions are not known for legislative productivity. Chip Kahn, CEO of the Federation of American Hospitals, commented, “I believe that the lame-duck session is going to be limited to measures that are either emergencies like Ebola or must do’s to keep the government open.” Similarly, Tom Scully, former CMS administrator under President George W. Bush, opined in Modern Healthcare that there is “1 in 10 million” chance of a permanent SGR repeal passing during the lame-duck session.

A higher-level political issue concerns the general tone of political discourse in Washington, D.C. In the days following the recent election, saber rattling by both parties about repealing Obamacare has undoubtedly spoiled the mood for the needed collaboration and compromise that would be required to get a permanent doc fix passed. It may be tempting for Republicans on the Hill to think, “We’ve got bigger fish to fry—i.e., repealing Obamacare—than devoting our energies to reforming the SGR, which has been patched 17 times in the past.”

The biggest roadblock to lasting SGR reform is the unanswered question of how to pay for a permanent SGR repeal. For a number of years, with its aforementioned high price tag, the SGR has been the elephant in the room of deficit reduction.

Every one of the previous permanent doc fix bills has either lacked any specific sources of funding—so-called “pay-fors” that would offset the increased government spending resulting from repeal of the SGR—or proposed sources that most Democrats or Republicans in Congress would not even be willing to consider.

Finding $131 billion to cover a permanent doc fix—roughly equivalent to 2 percent of what the federal government will spend on healthcare in the next 10 years—will be a formidable challenge, regardless of whether it is November 2014 or March 2015.

Hope does spring eternal. But hope that a permanent doc fix will be passed during the lame-duck session is unfounded.

For more on that, read my recent post: The Prospect of Permanent SGR Reform in 2015.

Write a Comment

Your email address will not be published. Required fields are marked *