How will Medicare change?
Although it has been praised by physician groups, important questions surround the Sustainable Growth Rate (SGR) Repeal and Medicare Provider Payment Modernization Act. One of the biggest questions is how to repay the $126 billion price tag. The bill, which requires approval from both chambers, does not indicate how Congress will fund a full repeal.
Under the SGR, physicians across the country would receive a 0.5 percent pay increase every year for 5 years because of a deal reached by a bipartisan team of House and Senate negotiators to repeal the existing SGR formula for physician payments under Medicare. The SGR repeal would do away with Medicare’s sustainable growth formula, which requires an automatic 24 percent cut in physician pay beginning March 31.
Among those opposed to the more substantial Medicare cuts to fund the new bipartisan legislation that would help repair cycles of patchwork fixes are hospitals. If the task is going to be completed this year, Congress may need to come up with a form of payment or a tax reform.
Under the bill, physicians will receive a 5 percent bonus if they receive a minimum of 25 percent of their Medicare revenue from a different payment model in 2018. Examples of some alternative payment models are patient-centered medical homes and accountable care organizations. The summary notes that the 25 percent threshold expands over time.
The issue of paying for the bill is not likely to be resolved soon, although several ideas have been mentioned. For example, Senator Ron Wyden of Oregon suggested lowering costs by enhancing the care for the unhealthiest 5 percent of Medicare beneficiaries. This move, Wyden suggests, could ultimately save roughly $25 billion per year.
Another potential fix was offered by the Congressional Budget Office report that was released in November 2013. The report suggested that tax exclusions from healthcare benefits provided by employers cost the federal treasury nearly $250 billion that same year. A slight reduction in that cost could prove to be one form of repayment.