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Lawmakers Forge Ahead on Long-Term Medicare 'Doc Fix,' but Obstacles Loom

By Emily Ethridge, CQ Roll Call

December 12, 2013 -- Even as Congress makes important progress in replacing how Medicare pays physicians, many hurdles large and small remain to be negotiated next year.

The House passed, 332-94, a bipartisan budget deal last week (H J Res 59) that was coupled with a short-term fix to avert a scheduled 24 percent cuts in physicians' reimbursements that would begin Jan. 1 under the current formula.

The budget deal now goes to the Senate for final passage. Stakeholders hope the three-month doctor patch, which would give providers a 0.5 percent update, will buy more time for finishing work on a replacement measure.

The short-term patch also would continue various Medicare and Medicaid "extender" provisions, and would save $300 million over 10 years, according to the Congressional Budget Office (CBO).

In more sweeping action on a long-term replacement, the House Ways and Means Committee and Senate Finance Committee recently approved measures that would permanently repeal Medicare's flawed physician payment formula, based on the sustainable growth rate (SGR). Although the committees were considering similar measures, the markups were very different.

The House panel moved much more quickly. Ways and Means considered only a chairman's substitute amendment to an existing bill (HR 2810), and approved, 39–0, the amended bill by the time the Senate committee was done with members' opening statements.

The Senate Finance Committee approved its measure by voice vote after five hours of work, often interrupted by votes on the Senate floor. Lawmakers withdrew most of the 140 amendments that had been filed to the legislation, which is based off a draft framework the committee crafted with Ways and Means.

The committee adopted seven amendments by voice vote, including one that would create a demonstration project version of bipartisan mental health legislation (S 264) sponsored by Debbie Stabenow, D-Mich.

But even though lawmakers and stakeholders are encouraged about the prospects for a replacement bill, many obstacles remain ahead—including the major question of how to pay for it. No offsets are included in the long-term fix. Lawmakers insist that they will find a way to offset any measure's cost, but are saving that discussion for the floor.

"Let me say it in no uncertain terms: This bill will be offset. Period," said Senate Finance Ranking Republican Orrin G. Hatch of Utah at the markup. He said he has had "extensive discussions" with Committee Chairman Max Baucus, D-Mont., and House committee leaders, and that they have agreed that "once the bill is out of committee, we will sit down to find suitable offsets."

The CBO found that simply repealing the SGR for 10 years would cost $116.5 billion over 10 years. It found the Senate Finance Committee legislation would cost $148.6 billion over that time period, and a replacement bill approved by the Energy and Commerce Committee in July (HR 2810) would cost $153.2 billion.

House Ways and Means Committee Chairman Dave Camp, R-Mich., said that the lower CBO score allowed him to give providers a 0.5 percent increase for three years in his amendment.

Still, he added, "Though the score is the lowest ever, it still must be paid for. And I am under no illusion that finding pay-fors will be an easy task."

Many House Democrats said that they would not support an offset that undermines the 2010 health care law (PL 111-148, PL 111-152) or puts more financial burden on Medicare beneficiaries.

Several Ways and Means panel members noted issues they had with the legislation and changes they would like to make—but they held off on offering amendments.

After citing several items that troubled him, including expanding the authority of the Centers for Medicare and Medicaid Services and interfering with Medicare's fee-for-service system, Georgia Republican Tom Price said he had "a lot of other concerns, but this day is a real opportunity," and voted for the bill.

Another big difference between the bills that remains to be worked out is the matter of the health care "extenders," which Congress typically renews each year for short periods of time. Neither of the House measures would address those payment policies, but the Finance Committee bill would renew some of them permanently and extend others for several years.

Hatch said the committee had taken "a thorough and complete look" at those provisions. "For those we believe are still justified, we will make them permanent. For others, we will extend for a period of time so we can continue to assess them," he said.

Several Democrats on the House panel called for the final legislation to include language addressing those extenders.

Some of the amendments adopted by the Finance Committee dealt with those extenders, including one that would extend a program that allows certain Medicaid beneficiaries to continue receiving benefits as they work more hours or increase their income. The amendment, from Democrats Sherrod Brown of Ohio and Jay Rockefeller of West Virginia, would extend the program for five years but give states additional flexibility to opt out.

The panel also adopted an amendment from Iowa Republican Charles E. Grassley that would make permanent the existing floor for the physician work index, based on three geographic factors, under Medicare's physician fee schedule.

In addition, it adopted an amendment from Grassley and New York Democrat Charles E. Schumer that would make permanent a program that gives additional payments to small rural hospitals and certain low-volume hospitals.

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