Congress Considers Permanent Fix to Medicare Physician Funding Formula

On March 24th, 2015, the House Ways and Means Committee introduced a bipartisan permanent fix to the Sustainable Growth Rate (SGR). The bill, H.R. 2, would remove the perennial threat of providers paying for a "doc fix" and inject much-needed stability for the long term and post-acute care sector.

You may have already read about this legislation. You may even know that it contains a cut for skilled nursing. That is the case – but we believe this legislation does much more good than harm. The promise of payment stability in the sector, as well as much-needed therapy reforms, means this is landmark legislation for our membership. AHCA’s Board of Governors endorses this effort to permanently fix the SGR.

What’s in it?

•    Stability – A permanent fix to the annual SGR battle. The doc-fix limped along year-to-year for a total of 17 patches. We estimate that skilled nursing has been cut by more than $27 billion to pay for short-term SGR fixes.

•    Therapy reforms – The bill includes a 33-month extension of the therapy cap exceptions process (through December 31, 2017). This allows providers to continue delivering therapy above the current $1,940 threshold as long as supporting coding and documentation show the services were medically necessary.

The legislation also mandates a new therapy review process to take the place of current manual  medical review (MMR). The new structure will be in place within 90 days of enactment of the bill. It will target providers with high denial rates and outlier billing patterns as well as new providers, certain medical conditions, and certain group practices.

The new system is limited to $10 million in funding across all provider settings for FY 2015-2016, which will substantially limit the regulatory burden on skilled nursing therapy services.

•    1 Percent Market-Basket Update – Skilled nursing is part of the pay-for in this bill. AHCA/NCAL staff worked closely with Congressional leadership to ensure that this cut is not an unbearable burden for our members.

Under the proposal, skilled nursing providers will receive a 1 percent market basket increase, net of other adjustments, in FY 2018. We had assurances from members of Congress that this increase would take into account the productivity adjustment within the Affordable Care Act. Our current assessment of the legislation is in line with that promise.

The two-year delay of this pay-for allows AHCA/NCAL time to work with Congress on our payment reform proposal as an alternative to the market basket cuts. AHCA’s payment reform proposal is part of our effort to seek quality solutions as an alternative to across-the-board payment cuts.

Where does it go now?

We expect this legislation to reach the House floor for passage as early as Thursday. Right now, we believe there is enough bipartisan support to send it to the Senate. Speaker of the House John Boehner released a statement today applauding the effort to permanently fix the SGR. He also stated the House would not attempt to pass another short-term patch, ratcheting up the pressure on the other chamber to take what the House has approved.

This creates a very tight deadline in the Senate. The Senate must pass a budget on Thursday night in an hours-long affair known as the "vote-o-rama." This is a time-consuming and tiring process for all involved. The Senate would then have to vote on an SGR repeal early Friday morning before a two-week-long holiday recess.

Because of these timing issues, it is significantly less likely the Senate will be able to send this legislation to the president’s desk this week. We still believe there is a chance they will. If they do not, however, they will either have to vote on a short-term fix to send to the House or allow CMS to hold claims while they recess.

What can you do?

If you have a strong relationship with your Representative, contact them and tell them to support H.R. 2.

AHCA/NCAL has developed talking points to help with your outreach. Time is of the essence and we need your support.

Following Thursday’s anticipated House vote, AHCA will provide additional information regarding continued outreach to your Senators.  

This is a bill the profession can get behind. The legislation the House will consider this week meets the criteria we laid out early in the process. A permanent repeal of SGR will mean a new level of certainty and stability for care providers across the country. And the needed reforms and extensions to therapy will go a long way in helping tens of thousands of patients who rely on these therapies to return to their communities.