"Coming up with approximately $140 billion in offsets will not be easy, but it is a task we must embrace."
Congressional members of the The House Energy and Commerce Subcommittee on Health kicked off a two-day meeting Wednesday to find a way to reform the flawed Sustainable Growth Rate formula and offset the $140 billion the program costs the government. The lawmakers, however, struggled to find a fix on the first day of hearings.
“Coming up with approximately $140 billion in offsets will not be easy, but it is a task we must embrace,” said Health Subcommittee Chairman Joe Pitts, R-PA during the meeting.
The subcommittee has until March 31 to find a solution before the a temporary “doc fix” measure expires and physicians see a 24 percent cut to their Medicare reimbursements.
“The question is how to pay for SGR reform in a manner that can pass both Houses of Congress and be signed by the President,” said Pitts, who authored the “doc fix” in the last session. “Some argue that SGR reform does not need to paid for. I respectfully disagree.”
The provisional bill was also responsible for pushing back implementation of ICD-10 to Oct. 1, 2015.
SGR was created in 1997 by Congress to curb federal spending by restraining the growth of Medicare’s reimbursements to physicians, according to former U.S. Sen. Joseph I. Lieberman, who spoke on Wednesday.
“Unfortunately, the crude budget cap did little to incentivize efficient provider or patient behaviors,” Lieberman said. “So, since 2002, Congress has routinely intervened to prevent cuts scheduled under the law, passing so-called ‘doc-fix’ legislation so physicians who provide care for Medicare beneficiaries continue to receive adequate reimbursement.”
Last year, there was bipartisan support for the Medicare Provider Payment Modernization Act of 2014, but the measure failed to pass before the end of the legislative term due to disputes over how to fund it.
The subcommittee will meet again Thursday, when Richard Umbdenstock, President and CEO of the American Hospital Association, is scheduled to speak.
In preliminary comments posted online, Umbdenstock said he recommends modernizing Medicare by combining Parts A and B with a unified deductible and coinsurance.
In traditional Medicare, beneficiaries’ hospital and acute care coverage (Part A) are separate, and have a separate cost-sharing structure, from physician and outpatient services (Part B).
Umbdenstock’s proposal, described by the Congressional Budget Office, would replace the current complicated mix of cost-sharing provisions with, a single, combined annual deductible covering all services in Parts A and B of Medicare; have a uniform coinsurance rate of 20 percent for amounts above that deductible, including in-patient expenses; and have an annual cap on each enrollee’s total cost-sharing liabilities.
The CBO estimates federal outlays would be reduced by $52 billion over 10 years, said Umbdenstock, who oversees the American Hospital Association’s estimated 5,000 member hospitals, health systems and other healthcare organizations.
Hospitals have seen repeated ratcheting down of payments for Medicare and Medicaid hospital services, facing more than $121 billion in cuts since 2010, he said.
Lieberman also said he supports streamlining Medicare into a single combined annual deductible.
Full Committee Chairman Fred Upton, R-MI, said Wednesday, “Securing a permanent solution to the SGR is more than tinkering with how we pay doctors who treat Medicare patients. This can also be Medicare reform. … The truth is, Medicare’s budget is out of control and the program is on the fast track to insolvency.”
This year marks Medicare’s 50th anniversary.
In fiscal 2015, gross spending on Medicare totaled $605.9 billion as Medicare provided coverage to 55 million individuals who are 65 or older, disabled or have end-stage renal disease, according to Lieberman.
According to the CBO, Medicare’s spending will continue to climb over the coming decade -- totaling well over $1 trillion by 2024 -- while the number of Baby Boomers enrolled swells by a third.
Other testimony Thursday is expected to come from representatives of the American Medical Association, AARP, American Association of Nurse Practitioners, Inova Health System and Foothills Women's Medical Center.