On the Eastern Front: Washington may be undergoing a thaw!

Apr 15, 2015, 08:48 AM by Melissa Harman

We always have to keep one eye on Austin and the other one on Washington.  This week, while the Texas Senate has been passing out a state budget that is vastly different from that passed out of the House several weeks back, the US Congress has also been at work – of sorts, considering that the Senate went on a two week vacation after the House had passed out the legislation.

Three weeks ago, the US House of Representatives took up the Sustainable Growth Rate (SGR) issue related to Medicare reimbursements.  For the past 12 years, that issue has evaded resolution by the US Congress.  In fact, the Congress has put 17 temporary Band-Aids on the issue, passing just-in-time stop-gap measures to keep the Medicare program and physician reimbursements on-line.  This time, failure to resolve the issue would have resulted in a 21 percent reduction in reimbursements to physicians serving Medicare patients.

To the surprise of many political pundits, Speaker John Boehner and Democratic leader Nancy Pelosi worked out a bipartisan plan that passed the House 392 to 37.  That plan creates a new “Merit-Based Incentive Payment System,” along with other alternative payment models that focuses on quality, value and accountability in the Medicare payment system. Over a five-year period, this system will replace the old volume-based payment program (i.e., payment for number of services performed) for one that focuses on rewarding physicians for improved quality of care and better patient outcomes.  More care management will be emphasized in the new payment system.

The new plan throws out the old Medicare physician payment rates, which were set through a formula based on economic growth (the SGR) and replaces it with a half-percent increase in each of the next five transition years as the system moves toward a value-based reimbursement methodology.  Financial rewards would prioritize physician use of the “patient-centered medical home,” chronic care management, better care coordination models, and use of data leading to quality improvement and transparency.

After their holiday, the US Senate on April 14 passed HR 2, the Medicare Access and CHIP Reauthorization Act of 2015 by a vote of 92 to 8. The act repeals the SGR formula and reframes Medicare reimbursement to incentivize quality.  On an almost unrelated subject but one of interest to those of us in health care, the bill also included a two-year extension of funding for the Children’s Health Insurance Program (CHIP).

In addition to addressing the Medicare payment issue – which has dragged on for over a decade, leaving patients and physicians uncertain about the future of the Medicare system – the reauthorization act also includes other items of benefit for physicians:

  • The current Medicare quality reporting programs will be streamlined and simplified into a merit-based incentive payment (MIPS) which will reduce the aggregate level of financial penalties physicians could have faced.
  • The legislation protects physicians so medical liability cases cannot use Medicare quality program standards and measures as a “standard” or “duty of care.”
  • The system will include incentive payments for physicians who participate in alternative payment models and meet certain benchmarks and thresholds established in those models.
  • Smaller medical practices will receive technical support to participate in alternative payment models or the new fee-for-service incentive program.

The legislative package sets up two tracks for physicians to receive payments:

  1. Track 1 would essentially maintain the status quo.
  2. Track 2 would allow doctors to place patients into a risk-based payment model which would qualify them for the alternative payment track and receive higher reimbursements starting in 2019.

It also provides:

  • Extension of CHIP funding by two years
  • The allocation of $7.2 billion in additional funding for community health centers
  • A six-month delay in enforcement of the CMS “two midnight” payment policy for short hospital stays where hospitals get paid on an outpatient basis if the patient’s stay doesn’t span two midnights in the hospital

Senator Orin Hatch described the final passage of the SGR reform as a “monumental achievement.”

All 8 votes against the SGR reform came from Republicans who favored paying for the cost of the bill by other budget reductions.  Among the “no” votes were Senators Ted Cruz and Marco Rubio; Rand Paul voted for it.

The legislation’s passage allows each party to “spin” the win their own way.  For Democrats, its passage marks the addition of funds for children and the poor; for Republicans, the bill introduces new models of payment that pave the way for quality improvement and cost reductions in the Medicare system.

Has Congress found a new way to work together?  One could only hope so!

The legislation now passes to the White House for President Obama’s signature, which is anticipated to take place with plenty of ceremony in the next few days.