On Thursday, 86% of the House of Representatives voted to repeal and replace the flawed Sustainable Growth Rate (SGR) formula designed to limit the growth of Medicare physician payments.  This remarkable show of bipartisanship indicates that a truly bad policy—one that no one was willing to implement—cannot survive forever.  Since 2002, Congress has passed 17 short-term "doc fixes" to avoid the drastic cuts in Medicare payments that the SGR requires.

The SGR was originally intended to keep Medicare payments to physicians in line with general economic indicators.  If actual spending surpassed target goals, physician payment updates would be cut each year, to keep spending in check.  However, the reductions, which would each have amounted to about 1%, have been postponed every year since 2002, so the cumulative effect of implementing the SGR today would be a reduction of 21%, a pay cut that few physicians could afford.

The vote last week shows that we should not be too hasty in declaring that Congressional consensus is impossible (although it has been quite rare recently).  The bill passed on Thursday pleases almost no one in its entirety; coming to a "yes" vote meant accepting provisions that were not optimal or preferred.  That's the nature of compromise, and as Congressman Ami Bera, MD, D-Cal., said, that's how Congress is supposed to work.

Deficit hawks are dismayed that the bill will add to the budget deficit, to the tune of $140 billion over ten years; others suggest that it will add little to the actual budget deficit, because no one was willing to implement the SGR's required 21% cut in physicians' pay.

Instead of the across-the-board SGR cut, the bill will allow physician payments to grow by 0.5% annually through 2019. After that, the bill sets up a two-tier payment system that encourages physicians to shift more of their practice into value-based payment models, including accountable care organizations, bundled-payment arrangements and medical homes.

A small part of the bill is paid for through higher premium costs for wealthier Medicare beneficiaries and eliminating Medigap coverage for Part B deductibles. Some consumer groups fear that means-testing Medicare premiums will undermine support for the program, and that higher out-of-pocket costs will create a burden for middle-class seniors.

The bill also extends funding for the popular Children's Health Insurance Program for another two years.  Advocates wanted the security and stability of a four-year extension.

It extends funding for community health centers (CHCs) and the National Health Service Corps, both of which have bipartisan support. The CHC funding comes with Hyde Amendment language restricting public funding for abortion, which concerned some reproductive health groups.

The Senate will take up the bill when it returns from its two-week recess.  Although nothing is certain, the strength of the House vote makes it unlikely that the bill will stall in the Senate.  Does the SGR fix herald a new path for bipartisanship in this broken Congress? Or does it only reflect a special set of circumstances that changes little about extreme partisan forces behind Congressional gridlock? There's no way to know, but perhaps this taste of accomplishment through compromise will leave our representatives thirsting for more.


Janet Weiner, MPH is Associate Director for Health Policy at the Leonard Davis Institute of Health Economics at the University of Pennsylvania (@weinerja).


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