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Government Relations Update: House Passes the SGR Repeal and Medicare Provider Payment Modernization Act of 2014


Last Friday, in a largely partisan vote, the House of Representatives passed a bill permanently repealing the Medicare Sustainable Growth Rate (SGR). H.R. 4015, the SGR Repeal and Medicare Provider Payment Modernization Act of 2014, is the previously agreed upon bipartisan/bicameral framework put forth by the three Congressional Committees with jurisdiction over the SGR.

In addition to formally repealing the SGR, the bill:

  • Authorizes annual automatic 0.5% payment update for five years (2014 – 2018).
  • Consolidates the three existing Medicare quality programs into a single value-based incentive program.
  • Provides incentives for providers to switch to alternative payment models (APMs) such as a 5% bonus to providers who receive a significant portion of their revenue from an APM.

Although the framework for the permanent fix has broad support, finding $138B over ten years to pay for the permanent fix has been a serious obstacle.

The bill passed by the House, pays for the permanent fix with a Republican supported measure delaying the Affordable Care Act’s individual mandate for five years (starting next year). In addition to covering the cost of a permanent fix, the Congressional Budget Office has estimated that this “pay for” will save an additional $30B but will also result in 13 million more people being uninsured and an average increase of health insurance premiums between 10 and 20 percent. Democrats have attempted to use unspent war funds as the offset; however Republicans are adamantly against such a measure.

The bill still must pass through the Democrat-controlled Senate and be signed by the President in order to become law. The prospect of this bill, with a five year delay of the individual mandate as the offset, becoming law is extremely unlikely. The Democrats in the Senate are publicly opposed to this offset and the President has already stated he will veto the bill if it comes to his desk in this form.

Congress has until March 31st, when the current patch expires, to prevent automatic 24% cuts in Medicare payments to physicians under the SGR. Congress could still come together to figure out agreeable offsets for a permanent fix or they could pass another short-term patch to give them more time to come to an agreement on offsets. A nine-month patch to prevent the 24% cuts through the end of the year has been discussed.

Both the House and Senate are in recess the week of March 17th.

HBMA will continue to monitor and track the direction this bill takes as the March 31st deadline approaches.

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