Rare Bipartisan Effort Finally Repeals Flawed Medicare Payment System

In an historic, overwhelmingly bipartisan vote on April 14, 2015, the U.S. Senate passed legislation to permanently replace the flawed Sustainable Growth Rate (SGR) system. President Obama signed the bill—H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015—into law shortly thereafter, ending years of uncertainty for physicians and patients participating in the Medicare system and finally putting this longstanding legislative goal to rest.

As Rep. Michael Burgess, MD, (R-TX) reflected “I’ve worked to resolve this issue my entire congressional career, and I extend my deepest thanks to everyone who played a part in making the burdensome SGR formula a relic of the past. May we never speak of it again.”

The new law calls for an annual 0.5% update to physician payments for the next five years, combines three existing quality programs (the Physician Quality Reporting System [PQRS], Meaningful Use, and Value-Based Purchasing) into one program, and incentivizes the use of Alternative Payment Models. ASN will work closely with the Centers for Medicare & Medicaid Services (CMS) to advocate on behalf of nephrologists and the patients they serve as the agency begins to roll out these and other components of the new law.

Repealing and replacing the SGR formula has been a top public policy priority of ASN for years, so passage of H.R. 2 marks a long-anticipated advocacy victory for the society. ASN worked closely with the Senate Finance Committee and the House Ways and Means and Energy and Commerce committees in shaping the H.R. 2 package, as well as in collaboration with a united physician advocacy community led by the American College of Physicians and the American Medical Association.

Congress tried for years to repeal the SGR, which was widely acknowledged as a broken and unsustainable formula. But it had been unable to do away with the formula wholesale and instead each year passed temporary legislation postponing reductions to physician payments that the SGR formula called for. Both parties in the House and Senate were in agreement regarding the fundamental policy changes needed to the SGR owing to legislation drafted by the previous Congress (which failed to pass due to disagreements regarding how to pay for the cost of the bill).

So, what changed this spring? Because much of the “heavy lifting” in terms of policy was already complete when Congress reconvened in January 2015, the only remaining barrier was the cost. Conventional wisdom used to be that Congress had to come up with a way to pay for the cost of replacing SGR. Replacing SGR was a very big ticket item, and lawmakers had long been stymied as to where the money should come from.

Then in March, House Speaker John Boehner (R-OH) and House Minority Leader Nancy Pelosi (D-CA) began to suggest that Congress should consider passing a bill to replace SGR that wasn’t totally “paid for” through cuts or spending reductions elsewhere. Among other reasons, Congress had spent more money and time on temporary postponements to SGR over the years than they would spend on just repealing the law itself. Building on Reps. Boehner’s and Pelosi’s leadership and with unified urging from the physician community, the chairs and ranking members of all three Medicare authorizing committees as well as Senate Majority and Minority leaders rallied to support this concept.

Although the legislation was in the end a rare moment of bipartisan collaboration, passage was not at all certain in the days and weeks leading up to the Senate vote. The Senate left for a two-week recess shortly after the House sent H.R. 2 over for consideration, leaving it with just two days to take action until Medicare would—as instructed by the SGR formula—cut physician payments by nearly 25%. Liberals in the Senate raised concerns about entitlement reforms included in H.R. 2, such as higher Medicare premiums for wealthier Americans, while fiscal conservatives in the Senate vociferously opposed passing a bill without offsets to cover the entire cost. Ultimately, the bill passed 92-8, a remarkable vote in a polarized Washington.

While repealing the SGR formula was an historic advocacy victory, considerable work remains to implement the law, which like every new law will bring its own benefits and challenges. Stay tuned to ASN Kidney News to learn more as CMS begins to roll our components of the new law.