Congress Stops Medicare SGR Cut: CMA Outraged Congress Fails to Adopt Long Term Medicare Fix

Medicare SGR Breaking News:

Friday, February 17, 2012: Congress passed a compromise bill that will put a 10 month freeze on the Medicare SGR cuts. This tentative deal delays the impending 27.4% Medicare SGR reduction that was supposed to happen March 1. Essentially, the bill allows for the 2011 Medicare reimbursement rates to remain active until the end of 2012.

This 10-month Medicare SGR temporary fix costs nearly $20 billion and is paid for by

• Reducing the public health fund in the Affordable Care Act by $5 billion
• Reducing payments to disproportionate share hospitals
• Lowering compensation for hospital bad debts 
• Cutting Medicaid funds targeted to help the victims of Hurricane Katrina in Louisiana. 
• It does not include the House-passed Medicare beneficiary premium increases which originally helped to pay for the SGR block.

CMA Urged the California Delegation to Sign the Bipartisan Dear Colleague letter that was circulated by Representatives Crowley and Benishek.  It asked the “Middle Class Tax Reform” Conference Committee to apply unused military funds from the early troop withdrawals in Iraq and Afghanistan to cover the cost of a permanent repeal, yet the final negotiators rejected those proposals.

Although the compromise bill relieves physicians of the Medicare cuts for the remainder of the year, the CMA and AMA are angry and believe that congress missed a unique opportunity to establish a permanent solution to repeal the Medicare SGR. They have merely blocked the cut and kicked-the-can for 10 months.  Rather than being the stewards of the Medicare program, it is distressing that some in Congress continue to triage the problems in our nation’s largest and most influential health care program on a month to month basis.  Physicians can’t operate a medical practice on such an ad-hoc basis. 

Improving the Medicare Payment System:

CMA is also developing innovative alternatives to the Medicare Payment System based on successful California models. The CMA is working to develop a series of alternative payment and delivery models to pilot test through the CMS Innovation Center (CMMI).  The pilot ideas are listed below and can work under a variety of payment models, such as shared-savings, various forms of capitation and fee-for-service: 

-          Clinical Variation Reduction and Quality Program facilitated by a California County Medical Society for Independent Physicians in the community - reviewed and accredited by the CMA Institute for Medical Quality (IMQ).  It would apply a shared savings payment model for participating physicians. 

-          Medicare and Medicaid Patient-Centered Medical Home Expansion for Primary Care and Certain Specialties where physicians become the primary treating physician.

-          Physician Peer Comparison Education and Shared Savings Program where physicians are compared to their specialty peers in their geographic region and rewarded for meeting certain utilization, quality, hospital admission and other standards set by physicians.

-          A Palliative Care Medical Home Project that coordinates care teams of physicians and other institutional and non-institutional providers, including hospice and home health,  to work with patients and their families to meet their wishes and provide palliative end-of-life care in the most respectful way in the most appropriate setting.

-          Accountable Care Organization Transition Model that gives solo/small group independent physicians more time and upfront resources to create physician-led, patient-centered organizations that coordinate care and improve the overall quality of care.

-          Pilots to Improve Physician Supply and Access to Care in Rural Areas, such as an expansion of the J-1 VISA Foreign Physician Program and telemedicine programs, reform of the Health Professional Shortage Area payment system so that physicians in nearby communities will be incented to care for rural patients.

Lame Duck Session of Congress:

With this compromise bill in action, Congress will be forced into a Lame Duck session after the 2012 elections to protect seniors and military families from an even larger 35% Medicare SGR payment cut in 2013.  By punting the Medicare SGR issue, Congress has dug itself a $400 billion SGR hole – up from $300 in 2012. A Lame Duck session of Congress will also be faced with the expiration of the Bush tax cuts, the upcoming sequestration that forces across- the- board government cuts -including a 2% cut in Medicare, as well as half a billion in military cuts.  And the government may hit the federal debt ceiling sometime late next fall. 

As usual, physicians will be competing with many interests (the military, the budget deficit, hospitals, health plans, beneficiaries and even the oil companies) for Congress’ attention and resources. It is one of the most difficult political and financial environments ever witnessed in Congress. 

Medicare Geographic Payment Locality Update:

CMA urged Congress to adopt a BUDGET NEUTRAL update of the California Medicare physician payment regions to Metropolitan Statistical Areas (MSAs). Medicare organizes and pays hospitals according to MSA regions. While the hospital regions are continuously updated so that reimbursement accurately reflects local costs to deliver care, the physician regions have not been updated in 15 years.  Therefore, some of California’s urban counties - San Diego and Sacramento - are still designated as rural.  This has caused some California physicians to be paid up to 14% per year below what Medicare says they should be paid if they were in the correct region.  

The proposal would have been paid for with savings from adopting a County Organized Health System in Alameda County as approved by the ACCMA.  While CMA was finally able to remove most of the opposition on this proposal, it was difficult to move a new issue into a conference agreement and it literally failed in the final hours of the negotiations.

CMA thanks members of the California Congressional delegation, particularly Representatives Farr, Bilbray and Senator Feinstein for their leadership and commitment to resolving this issue.  CMA will continue to look for other legislative vehicles to accomplish our locality update during 2012.    

CMA Advocacy:

To that end, CMA will remain involved at the highest levels of Congress to continue to protect the profession and speak out for our patients.  CMA will never stop fighting.  CMA thanks all county medical societies and physicians who got involved, held meetings with their Members of Congress, made phone calls and wrote letters.  We particularly thank those of you who involved your patients in this important campaign.  Your CMA physician leaders were in Washington, D.C. all week working to get a better deal for CMA physicians and your patients.  Their incredible dedication and commitment should be recognized and appreciated by all.