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Biggest Hurdle to Permanent 'Doc Fix' Could Be Time

By Melissa Attias, CQ Roll Call

March 13, 2015 -- House leadership's involvement in the effort to permanently replace Medicare's physician payment formula is seen as a serious signal that a bipartisan deal could be within reach. But keeping any grand bargain from unraveling before scheduled cuts take effect April 1 will be a tall order, to say the least.

Ever since House and Senate leaders struck an agreement on the policy last year, the hang-up has been how to pay for bipartisan legislation to replace the cost-control mechanism dictating the cuts, known as the sustainable growth rate formula, or SGR.

Congress has stepped in 17 times since 2003 to temporarily protect doctors' fees, and House Ways and Means Chairman Paul D. Ryan said last week that this time would be no different. The recently raised $174.5 billion price tag for the compromise bill added to the challenge, along with the general distrust between the parties.

Earlier this week, however, House leadership aides confirmed that their teams are working on the issue, igniting fresh hope that the era of perennial payment patches may soon be over.

"We are extremely optimistic about the rekindled negotiations that are occurring regarding how to advance this policy before March 31 to permanently reform the system," said Ray Quintero, vice president of government relations for the American Osteopathic Association.

Lobbyists for doctors said a deal could be rolled out early next week.

But navigating the tight pre-recess legislative schedule could be the biggest challenge. The House is in session for only eight days before the March 31 deadline, jetting home for the spring recess on March 26. The Senate's tentative schedule shows that March 27 will be its last day before the two-week break, and senators are expected to spend their final week having a long series of votes on a budget resolution.

Physician lobbyists said the cost of an agreement will only be partially paid for, which has already sparked pushback from the conservative group Heritage Action for America. Communications Director Dan Holler said any permanent fix "must be financed with permanent Medicare savings, period" and that anything that "only offsets a fraction of the cost" is a non-starter.

"Americans didn't hand Republicans a historic House majority to engage in more deficit spending and budget gimmickry," he said in a statement.

Senate Finance Chairman Orrin G. Hatch indicated a partially-offset bill isn't necessarily a deal breaker. Asked if it should all be paid for, the Utah Republican said he would do it "no matter what it takes."

Democrats have argued that the legislation doesn't need to be offset.

While optimistic about the prospects for a long-term fix, Hatch said he couldn't say whether lawmakers will be able to pass it before the current patch (PL 113-93) expires March 31. The Senate is taking a backseat to the House, with Hatch saying that his chamber will see what the other comes up with.

Lobbyists for doctors expect a deal to include a two-year extension of funding for the Children's Health Insurance Program, which serves low-income children whose families aren't poor enough to qualify for Medicaid. A four-year extension is a priority for Democrats - funding expires Sept. 30 - while Republican committee leaders released a discussion draft last month that would make a number of changes to the program.

Negotiators are also expected to renew various expiring health payment extenders that accompanied the last "doc fix" patch for two years, which would add to the cost. But they're keeping the proposed offsets for the package confidential and will likely will continue to do so for as long as possible, anticipating that advocates will quickly descend on Capitol Hill in protest.

A hospital lobbyist acknowledged that some level of cuts is necessary to get over the hump but is looking to mitigate those, noting that hospitals have seen a series of reductions. The lobbyist is also optimistic that things are headed in the right direction, characterizing the effort as a very serious give-and-take on both sides of the aisle.

The Congressional Budget Office, meanwhile, has released estimates of the health care proposals in President Barack Obama's fiscal 2016 budget, offering fresh insight into how much money possible offsets might save.

A proposal to change payment updates for some post-acute care providers clocks in at $78.5 billion in savings through fiscal 2025, another to shrink Medicare bad debt payments saves $31.3 billion, one that raises income-related premiums for Medicare outpatient coverage and its prescription drug benefit brings in $62.5 billion, and another to line up Medicare drug rebates with those in Medicaid for low-income beneficiaries saves $121.3 billion.

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