The senate hastily passed the “Protecting Access to Medicare Act of 2014” which was first introduced on March 26, 2014. It has spiked both anger and relief from various sectors of the healthcare industry. (1) The bill was signed by the president just in time to avoid Medicare cuts being implemented under the Medicare’s sustainable growth rate (SGR) payment formula. In 1997, the year of the balanced budget act(BBA), Congress created the SGR formula, which set the Medicare budget spending to a fixed rate, with the expected growth in the economy. In the years that followed the BBA, it was evident that health care spending was not in proportion with (in-fact, it out-paced) the total national spending. The Medicare expenditure was not an exception and so, the funding soon fell short. The Protecting Access to Medicare Act of 2014 proposes many changes other than the delay of the SGR implementation. It:
- Delays, till Oct. 1, 2015, the switch to ICD-10
- Provides a 0.5% Medicare pay bump over that 12-month period
- Revalues certain physician payment codes
- Delays the requirement for hospitals to comply with the "two-midnight" rule for inpatient reimbursement
- Pushes back recovery audits of allegedly unnecessary claims until March 2015.
What are some of the implications of the new Act? The implementation of SGR could have done serious damage, as physicians were facing up to 24 % decrease in the reimbursements from Medicare. To avoid lower payments, it is predicted that physicians could have resorted to avoid seeing Medicare patients, which could have far worse implications, as far as total healthcare outcomes are concerned. Due to ACA, hospitals are already facing numerous regulations and constraints, with 2014 being a bell-wether year for the healthcare industry. For struggling practices and smaller hospitals, this may well have been a death blow.
Although this latest act does more good than harm, it's not devoid of criticism. One of the issues that were highlighted in the senate debate, by the Republicans is: whether or not, to completely repeal Medicare’s SGR payment formula, which is viewed by many as draconian. The American Medical Association, strongly opposed the 12-month SGR “doc fix”, saying it would derail efforts to permanently kill the SGR.
For physicians and the hospital lobbists, the issue is more serious as the SGR fix comes with 2013′s Meaningful Use Stage 2 delay. Section 212 of the act says that the Department of Health and Human Services cannot mandate ICD-10 as the standard code set before Oct. 1, 2015. Health care is changing fast:;technology and new payment models are being embraced by the industry with open arms. The government, on the other hand, is not able to keep pace with the changes.
Centers for Medicare and Medicaid services estimate that a one year delay could cost between $1 billion and $6.6 billion, to the industry (2). Not only that, such temporary fixes are not without their price tags. Congressional Budget Office estimates that the U.S. has thus far spent $146 billion on the fixes, while the total cost of repeal would have been only $116 billion (3). It will be exciting to understand what are the reasons for not completely repealing the SGR formula? Having a consensus to discuss the issue in the senate has been reported as one reason. Personally, I believe that great pieces of legislation, ones that affect an entire nation, demand patience from not only the general population, but also from politicians.
1 Washington Post
2 HIT Consultant.
3 Government Health IT