113th Congress, Vote 135; House of Representatives #4015

SGR Repeal and Medicare Provider Payment Modernization Act of 2014

Official Title: To amend title XVIII of the Social Security Act to repeal the Medicare sustainable growth rate and improve Medicare payments for physicians and other professionals, and for other purposes.

HR 4015: SGR Repeal and Medicare Provider Payment Modernization Act of 2014
Passed by the House March 14, 2014, 238-181 (12 abstaining).

Synopsis: Medicare’s Sustainable Growth Rate (SGR) formula was enacted in 1997 as a means to keep Medicare spending in line with overall economic growth. Although it worked well initially, medical costs far outpaced GDP growth in later years, resulting in annual "doc fix" legislation to prevent significant cuts to Medicare provider reimbursement rates.

Following the SGR formula in 2014 would have resulted in a 24 percent cut in payments to Medicare providers. This was universally unpopular, but avoiding it would require either legislation to repeal and replace the SGR, or another doc fix patch to delay the payment cuts for one more year. HR 4015 endeavored to fix the problem once and for all by repealing the SGR and replacing it with a new provider reimbursement formula.

HR 4015 would implement a Medicare provider reimbursement increase of half a percent each year from 2014 to 2018, followed by a reimbursement freeze from 2019 through 2023. After that, reimbursements would grow by 1 percent annually for doctors who participate in voluntary alternative payment models, and by half a percent for those who don’t. Starting in 2018, HR4015’s merit-based incentive payment system (MIPS) would also provide bonuses of 4 to 9 percent for physicians who rate highly on the quality of care metrics in the MIPS.

There was bipartisan support for the logistics of the SGR repeal/replace portion of HR4015, but Rep. Dave Camp (R – Michigan, and Chairman of the House Ways and Means Committee) added an amendment that would delay the ACA’s individual mandate penalty for five years. Although the amendment would save the government $170 billion over the next decade – more than enough to fund the new Medicare payment increases – Democrats rejected this aspect of the legislation, and bipartisan support withered at that point. As a result, 2014 was once again a "doc fix" year – lawmakers passed HR 4302 instead, which simply delayed the SGR’s Medicare provider reimbursement cut for another year.

Why supporters pushed for this bill

• If the SGR’s 24 percent reimbursement cut were to be implemented in 2014, the Congressional Budget Office (CBO) estimated that it would take ten years for reimbursement rates to eventually get back up to where they were in early 2014. Lawmakers, providers, and patient advocates were all concerned that this would result in doctors leaving the Medicare system, and a disruption of provider access for Medicare patients.
• HR 4015 would be a net financial gain for the government. The CBO estimated that HR 4015’s new provider reimbursement formula would cost $138 billion over the next decade, but Rep. Camp’s amendment to delay the individual mandate would save the government about $170 billion over that same time frame, since fewer people would enroll in Medicaid and subsidized health insurance coverage.
• The American Medical Association and most other physician organizations supported HR 4015. Although the reimbursement increases in HR4015 are modest, they are steady and predictable, eliminating the uncertainty that has plagued Medicare reimbursement for more than a decade.
• HR 4015 would be a permanent fix, so Congress wouldn’t have to enact doc fix legislation each year. An extensive group of medical organizations opposed the 2014 doc fix legislation, preferring HR4015 instead.
• Supporters noted that the twelve previous doc fix patches had cost a total of $150 billion, and that continuing to implement temporary solutions each year was not a sustainable solution.

Why opponents tried to stop the bill

• Although there was a general consensus that the SGR needed to be replaced, Democrats and ACA supporters were unwilling to agree to finance the new Medicare payment model by delaying the individual mandate penalty for five years.
• Delaying the individual mandate penalty would result in millions more people without health insurance. The CBO estimated that if the individual mandate penalties were to be delayed until 2019, there would be about 43 million uninsured people in the US in 2018 – roughly 13 million more than there would be if the penalties were not delayed.
• Democrats in Congress rejected the notion of tying together SGR repeal and a delay of the ACA’s individual mandate penalty. They viewed the latter as yet another attempt by ACA opponents to derail the ACA, and Democratic support of HR 4015 disappeared almost completely when Camp’s amendment was added to the bill.

03/14/2014

Status: House passed

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