Last night, the U.S. Senate overwhelmingly passed H.R. 2, with a 92-to-8 vote, which will completely overhaul the Medicare payment program. This move, which follows the U.S. House of Representatives’ near-unanimous vote two weeks ago, is a monumental, bipartisan action taken by Congress, that negates the Medicare sustainable growth rate (SGR) formula and extends the Children’s Health Insurance Program (CHIP). President Obama is expected to sign it into law.

The California Medical Association (CMA), along with the American Medical Association and other health care organizations, that have been fighting to end the SGR for 12 years.

Without action by Congress, physicians faced a 21 percent cut in Medicare reimbursement the very next day. Senate leaders cleared the way for final passage by allowing votes on several amendments sought by both sides of the aisle.

“H.R. 2 is an unprecedented display of bipartisanship on the SGR. After more than a decade of inaction, this is truly a historic moment,” said CMA President Luther F. Cobb, M.D. “This legislation will substantially improve access to care for the 5 million California seniors and disabled patients, nearly 1 million military families on TriCare, and nearly 1 million uninsured children.“

CMA applauds this rare bipartisan achievement in a deeply divided Congress. CMA, the American Medical Association and more than 780 state and national physician organizations supported the bill. The policy was developed jointly on a bipartisan basis by the three House and Senate health committees. U.S. House of Representatives Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA) are credited with negotiating the budget offsets to fund the final SGR bill.

Major provisions of H.R. 2:

• Repeals the SGR
• Provides automatic, stable 0.5 percent updates each year for four years
• In 2019, physicians can choose to participate in one of two payment track options:
• Maintains a fee-for-service track that simplifies and consolidates the existing quality reporting programs, reinstates large bonuses up to 9 percent and reduces current penalties
• The alternative payment model track provides 5 percent bonus payments and allows physicians to develop the new models, such as primary care/specialty medical homes.
• Physicians are also required to be involved in defining quality
• $125 million in funding to help small practice physicians transition to the alternative models or quality reporting programs
• Reinstates bundled payments for the 10-day and 90-day global surgical services
• Provides total cost of care data to help physicians better manage their practices
• Mandates interoperatibily of electronic health record systems

The bill represents a significant improvement over the current Medicare program, which mandates penalties up to 13 percent in the coming years with no opportunities for payment updates or bonuses. This bill also consolidates the burdensome reporting programs and reinstates significant bonus payments. By repealing the SGR and providing annual updates, it provides stability to physician practices that allows for longer term planning. Significantly, it allows physicians to design new payment systems that work for themselves and patients instead of government bureaucrats and it mandates physician involvement in defining and developing quality measures. Moreover, once the costly SGR is repealed, it will be much easier for physicians to work with Congress to make improvements to the payment system at a lesser cost. The enormous cost of the SGR has been a barrier to making any improvements.

The bill also extends the expiring Children’s Health Insurance Program for two years at the higher Affordable Care Act (ACA) funding levels. It covers nearly 1 million children in California who would otherwise lose their insurance. CHIP was formerly known as Healthy Families in California before it was folded into the Medi-Cal program. It also extends the moratorium on RAC audits of the hospital two-midnight rule, which helps hospitals and physicians. And, finally, it extends the National Health Service Corps and the ACA teaching health centers primary care residency training programs.

Funding Sources:

The Congressional Budget Office (CBO) estimated the cost of the bill would total $211 billion over 10 years and will not be fully offset with other funding sources.

For 12 years, Congress has stopped the SGR payment cuts before they have taken effect; because of that, Speaker Boehner and Leader Pelosi concluded that any federal government savings would be phony and the cost to repeal SGR should be $0.

Another $70 billion for the measure will come from deductibles for new MediGap policies starting in 2020. The top 2 percent of high-income seniors will see their premiums increase to 15 percent more for couples making $267,000 to $320,000, and 20 percent more for couples making more than $320,000 in retirement income. There will also be a $35 billion payment cuts to hospitals and other providing post-acute care services. This final cut does not apply to physicians.

CMA thanks physicians for their extraordinary efforts to keep fighting to pass this monumental legislation. Fifty-two members out of 54 member California Congressional delegation supported physicians on this subject. Unity within the physician community helped achieve this stunning victory.