Senate Passes Permanent SGR Fix; Therapy Caps Exceptions Process Extended Two Years

On April 14th, by a vote of 92-8, the Senate passed H.R. 2, the Medicare Access and CHIP Reauthorization Act, which had passed the House over two weeks ago by a wide margin. Eight Republicans voted against the bill: Senators Cruz, Lee, Perdue, Rubio, Sasse, Scott, Sessions, and Shelby. Six amendments were offered to the bill and all were defeated, including Sen. Cardin’s amendment to repeal the outpatient therapy caps. The bill will now be sent to the President who has already stated that he will sign it into law. It is clear that Congressional leadership did not want any amendments to pass because it would have meant that the bill would have to go back to the House for further consideration—a result that might have imperiled the legislation and would most certainly have meant that the 21 percent reduction in the fee schedule would have gone into effect on April 15^th . A few key points:

• Fee Schedule.  The legislation prevents the 21.2 percent decrease in Medicare payments under the physician fee schedule which would have taken effect on April 1, 2015. Instead, H.R. 2 freezes the payment rates at current levels for 3 months and then raises them by 0.5 percent for services rendered during the last 6 months of calendar year 2015.  For services paid under the fee schedule and provided during calendar years 2016 through 2019, the payment rates would be increased by 0.5 percent per year.  Payment rates would remain at the 2019 level through 2025 but beginning in 2019, the amounts paid to individual providers would be subject to one of two new methodologies chosen by the physician—an Alternative Payment Model or a Merit-Based Incentive Payment system. A fulsome description of these alternative payment mechanisms will be provided shortly.
• Therapy Caps. The statutory authority for the exceptions process for the outpatient therapy caps expired on April 1, 2015. The legislation extends the authority for the exceptions process through December 31, 2017. It also includes provisions to enhance the targeting of manual medical review.

• Sen. Cardin’s Amendment to Repeal and Replace the Therapy Caps. Sen. Cardin marched into the breach and offered an amendment to permanently repeal the outpatient therapy caps and replace them with a methodology substantially similar to the one that had been approved by the Senate finance Committee last year. Despite his valiant efforts, the amendment failed 58-42. Almost all of the amendments were subject to a 60 vote requirement instead of a simple majority --the amendment was embroiled in a procedural difficulty arising from the cost of the legislation not being fully offset.  The support for the amendment was bipartisan and even though the amendment did not pass, 58 votes is a very strong endorsement of the policy behind the amendment and will position us well for future efforts to repeal the caps. Click here for the text of Sen. Cardin’s amendment. You might also like to view the Senator’s floor statement on his amendment: http://www.c-span.org/video/?c4534367/senator-cardin-therapy-cap.

Repeal of the SGR methodology has been a long time coming. It was put into law in the Balanced Budget Act of 1997 and since that time, Congress has had to pass legislation 17 times to prevent the fee schedule reductions from taking effect and to preclude the therapy caps from having full force and effect. The cost—viz. “payfors”—for such legislation totals approximately $150 billion.  The cost of H.R. is $210 billion but only $70 billion of that amount is offset within the 10 year budget window.