An $150B end to 'doc fixes'?

Congress is tangling with doctors, hospitals and seniors organizations as it seeks to push through a long-sought change to Medicare that carries a $150 billion price tag.

Doctors cheered this month when committees in the House and Senate released a framework for a permanent “doc fix” that would repeal a flawed payment formula under Medicare that Congress has routinely patched since the late 1990s.

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But excitement about the breakthrough on the Medicare Sustainable Growth Rate (SGR) was tempered by the fact that lawmakers left the most difficult question unanswered: how to cover the $150 billion cost.

“The challenge at the end of the day is that Congress has to come up with the pay-fors but they are going to have to balance this appropriately,” said Dr. Ardis Dee Hoven, president of the American Medical Association. “It’s going to be difficult. It’s going to be a heavy lift. We understand that.” 

Now industry groups are digging in for a protracted lobbying battle that could determine who is left paying the tab once Congress decides to act. 

“It’s essentially a miracle that they got bicameral, bipartisan support but it is always safer to bet against Congress actually doing something,” said one Democratic healthcare lobbyist.

Lobbyists attribute their pessimism to a lack of political will on the part of lawmakers who are hesitant to hand down cuts to powerful healthcare constituencies during an election year.

“Given the time frame we are talking about, I think you are realistically looking at another extension while they still look to find longer-term offsets. It will be difficult to get this done by the end of March,” said G. William Hoagland, senior vice president at the Bipartisan Policy Center.

Hospitals, still facing heavy cuts from the budget sequester, are wary of the new legislation.

“Enough is enough. We can’t support anything that has hospital cuts in it,” said Chip Kahn, president and CEO of the Federation of American Hospitals. “What I’m telling lawmakers is that I’m for fixing SGR but the hospitals have plenty of cuts for the next 10 years. If they are going to seek funding for it, they are going to have seek funding for it somewhere else.” 

Influential senior advocates also don’t want to pick up the check for the doc fix. In a statement when the bill was released, Joyce Rogers, AARP’s senior vice president of government affairs, said the group was “encouraged” by the legislation but “we ask Congress to reject proposals that unfairly ask America’s seniors to pay more by offsetting the cost of this policy fix on the backs of seniors.”

Conservative budget hawks are also watching the bill. The Heritage Foundation helped organize a Feb. 10 briefing for congressional aides on the doc fix and emphasized the need to offset the cost.

“We will not support a bill if it is unpaid for or paid for using misguided or insufficient offsets,” said Dan Holler, a spokesman for Heritage Action for America, the think tank’s sister organization.

Doctors’ groups are lobbying hard for the legislation in hopes of finally ending the uncertainty over how much their members will be paid from year to year.

The AMA and dozens of other groups signed onto a Feb. 10 letter to Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.) in support of the repeal bill.

“This is a historic opportunity. They must seize the opportunity,” Hoven said.

Supporters of the bill note that while permanent reform is expected to cost up to about $153 billion over 10 years, that’s much smaller than previous estimates of roughly $300 billion, when healthcare costs were anticipated to be higher.

“Certainly better to have a bill that costs $150 billion than $300 billion,” said Christian Shalgian, director of advocacy and health policy for the American College of Surgeons. “That number can fluctuate and can go back up, so certainly it would be great to get this done now.” 

One Republican lobbyist, however, said the $150 billion target is still difficult.

“Being down two touchdowns with 2 minutes left to play is better than being down four touchdowns,” said the lobbyist.

The bipartisan bill would repeal the SGR, raise doctors’ pay for five years and create a new system of incentives designed to improve patient care and lower costs. It would also provide additional payments to doctors who migrate to new payment models in an attempt to move the system away from fee-for-service. 

Released after roughly a year of negotiations, the final legislation was praised throughout Capitol Hill as a vital step away from short-term fixes.

Congressional aides said lawmakers are still negotiating on how to pay for the bill and are searching for offsets that can earn bipartisan support.

“Negotiations remain ongoing and members and staff will continue to build upon the progress that has been made,” said a spokeswoman for the House Energy and Commerce Committee, one of the panels involved in the bill.

Many sectors are seen as on the chopping block, including long-term care, home healthcare and laboratories. But no one industry can shoulder the cost of repeal on its own. 

The AMA said there is a menu of pay-fors from which to choose, pointing to a November 2013 report issued by the Congressional Budget Office that listed options to pare down the deficit. The Bipartisan Policy Center has offered up a number of offsets as well.

“There is no magic potion. It’s whatever people put together,” said one Democratic lobbyist.

“The easier thing is the short-term fix because the pay-for can be for less, but I think the docs smell blood in the water and want to get something more,” the lobbyist said.

Healthcare advocates are also contending with change at the Senate Finance Committee, which helped negotiate the bill. Some lobbyists expect the new chairman, Sen. Ron Wyden (D-Ore.), to take a go-slow approach.  

“He’s a new incoming chairman so he will want to follow his leadership. He will be reluctant to throw a bunch of offsets on the table right away,” said the Democratic healthcare lobbyist.

In addition, Wyden is seen as a maverick who could attempt SGR repeal as part of a wider Medicare reform agenda.

“He may want to extend [the doc fix] and see how it fits in a broader package in 2015,” Hoagland said.