NAHC President Val J. Halamandaris Praises ‘Doc Fix’ Passage
Congress passes SGR legislation; President Obama vows to sign it
April 16, 2015 08:54 AM
Late last night, an overwhelming majority of U.S. Senators passed Medicare legislation that reforms the physician payment formula known as the Sustainable Growth Rate (SGR). With the House having already passed identical legislation last month, the ‘doc fix’ bill now goes to President Barack Obama who has already praised the legislation and vowed to sign it.
The Senate passed the bill with 92 senators voting in favor and only 8 senators voting against. Last month, the House pass the same bill by an overwhelming margin, with 392 members voting in favor, 37 against, and four not voting.
Val J. Halamandaris, President of the National Association for Home Care & Hospice (NAHC), praised both houses of Congress for passing the bill.
“The Wicked Witch is dead,” Halamandaris said. “This bill lifts a black cloud that has been perpetuated over the ill, aged, and disabled for over a decade. The flawed physician payment formula has been like a game of Russian roulette with a gun at the head of the physicians of America. I want to thank Speaker John Boehner and Minority Leader Nancy Pelosi for reaching across the aisle to negotiate this miraculous agreement. I also want to thank Senate Majority Leader Mitch McConnell and Minority Leader Harry Reid for ushering the compromise through the Senate, as well as President Barack Obama for supporting and agreeing to sign it. This bill is a good thing for the providers that have financed 17 previous patches through reductions in their payment rates.”
Halamandaris also praised a provision in the bill that extends the Medicare rural add-on for home health agencies, which has been a top priority for NAHC.
“The rural add-on extension is a matter of life and death for our rural areas,” Halamandaris said. “To smell the clear air should not be a death sentence. Our Medicare system should not discriminate against someone based on an accident of birth. The rural add-on helps take the pressure off of our rural agencies and improves access to care in our rural areas.”
The SGR bill would institute a permanent fix in the physician payment methodology, which is important for the Medicare providers because they have regularly financed previous patches by experiencing reductions in their provider payment rates. While the total cost of the SGR legislation is estimated to be approximately $200 million, the bill only offsets $70 million of that total cost. Therefore, it is likely that the provider rate cuts contained in the bill’s offsets total much less than the cuts that would have resulted from a series of additional patches.
As previously reported, in order to partly offset the cost of replacing the SGR formula, the bill sets the annual payment rate update for post acute and hospice providers (Market Basket Index) at 1 percent in 2018. This represents an estimated 1 point reduction from what would have otherwise been the update. NAHC has argued that the home care and hospice industry has already made enough sacrifices. NAHC continues to prepare alternatives that could achieve comparable savings, as there may be an opportunity later this year for NAHC to present Congress with alternative reforms to Medicare to replace the rate cuts.
The bill also contains a modification to home health surety bond requirements, setting the bond minimum at $50,000 and allowing Medicare to scale the bond value above $50,000 commensurate with a home health agency’s volume of Medicare revenue. Under this provision, the Centers for Medicare & Medicaid Services (CMS) has considerable discretion to implement the requirement and set the scaled bond amount for those bonds greater than the minimum of $50,000. Even without the legislation, CMS had the authority to implement a bond requirement on home health agencies but chose not to do so up to this point.
NAHC opposed the inclusion of the surety bond provision in the SGR legislation and will continue looking for opportunities to repeal it. Among NAHC’s arguments against the surety bond requirement include: it would further hurt providers currently struggling to comply with expensive regulations; it would threaten access to care especially in rural areas; it is effectively a tax on the vast majority of providers to cover the cost of a few bad actors; it provides too much discretion to CMS in setting the bond amount and implementing the requirement; any surety bond requirement should be time-limited and targeted to new providers only. Long-standing providers rarely present a risk to Medicare. The Congressional Budget Office estimated the bond requirement would achieve only $10 million in Medicare savings over 10 years, while costing an estimated $130 million over that same 10 years. The small estimated savings indicate that virtually all home health agencies fully repay any Medicare overpayments.
Please click here to use NAHC’s Legislative Action Center to urge repeal of the surety bond provision.