A bill passed by the House on March 26, by a surprising bipartisan majority of 392-37, H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015, will enhance the Medicare program. The bill proposes a 0.5 percent payment update every year for five years, and would improve the fee-for-service system by streamlining Medicare’s existing quality assurance programs into one value-based performance program. The Senate is set to vote on the bill in two weeks.
Medicare was passed 50 years ago by overwhelming support in Congress, by votes of 302-116 in the House and 70-24 in the Senate. Since 1965, it has provided a set of comprehensive benefits as an earned right without regard to health conditions or income, with all beneficiaries paying into the program through mandatory contributions from individuals and/or employers. For the last 50 years, Medicare has been a solid rock of coverage in a sea of unstable and expensive private plans.
The goal of this new bill is to replace the flawed Sustainable Growth Rate (SGR) formula for setting Medicare payment rates for physicians. The SGR formula was set in 1997 in a deficit-reduction law that ties payment rates to economic growth, which has led to recurring last-minute budget crises and 17 short-term “fixes” since 2003. These short term “fixes” have cost billions in taxpayer dollars. The new system would replace the current volume-based system with one that rewards quality care of Medicare beneficiaries. The new bill was also designed to:
- Preserve Medicare for the 50 million seniors and disabled citizens who rely on it.
- Enact incentives for providers to focus on the quality rather than the quantity of care.
- Strengthen measures to detect and prevent fraud and reduce burdensome bureaucracy.
- Extend the Children’s Health Insurance Program, which will maintain insurance for 3 million Americans who would otherwise go without coverage or be forced into Marketplace ‘exchange’ plans.
- Save taxpayers over both the short- and long-term, estimated at $230 billion in the second decade after its approval.
However, if the bill is signed into law, this would reduce the reimbursement rates for physician services rendered by 21% for treating Medicare patients. The fear is that if physician pay is reduced many doctors would simply choose to stop treating Medicare patients.
Among the many structural changes in this massive bill there are two that critics say may seriously undermine the future integrity of Medicare:
- Limits the availability of first-dollar supplemental Medigap insurance coverage, which may result in higher-deductibles, which could be unaffordable for some beneficiaries.
- Introduction of means testing whereby higher-income seniors would pay more for their Medicare coverage. This would increase payments, permanently, that higher-income seniors would pay for their Medicare coverage.
These changes are projected to save billions over the next decade and promote quality of treatment over quantity. H.R. 2 bill will go to the Senate, which returns from recess on April 13th. The Senate is projected to follow suit with the House, by a wide margin, and President Obama is expected to sign H.R. 2 into law.