Daily Editors' Notes

New SGR proposal: Progress or pie in the sky?

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Staff Writer Tim Mullaney
Staff Writer Tim Mullaney

I've recently drawn up my plans for the winter, and I'm very excited about what's in store! I'd like to share my ideas with you and get some feedback. Let's call this the “Winter 2014 Agenda: Discussion Draft.”

I'm going to begin the year with a trip to the Galapagos Islands. Every winter I want to take a tropical vacation to escape the Chicago weather, and this is going to be the year I follow through! Upon my return, I'm going to move into a bigger apartment and buy a new car — maybe a Tesla? Sure, they're super-expensive, but they're zero emission. I'll consider it an investment in a livable planet. Since I'm going eco-conscious, I'll buy a nice bicycle, too. I'll hang it on the wall of my spacious new apartment and hit the road as soon as the snow melts!

What's that? You're wondering how I'll pay for all this? Don't worry about it — I'll address that later. I'm sure I can figure something out. The important thing for now is to decide on a plan.

Okay, to spell out the obvious … I'm kidding. I don't really have a “discussion draft” of my winter plans.

However, two Congressional committees — House Ways & Means and Senate Finance — issued a very real discussion draft last Thursday, laying out a joint proposal for repealing Medicare's broken system for determining physician pay. Like my fictional winter agenda, it paints an appealing picture of a better future. Also like me, the committees did not describe how their proposal might be paid for. (This follows a similar proposal passed by a different House committee in July. Also no talk about payment in that one.)

The payment piece is of great concern to long-term care providers. Medicare's sustainable growth rate was designed to keep physician payments in line with gross domestic product, but, as you probably know all too well, the SGR has not worked. Year after year, Congress enacts SGR “patches” to prevent reimbursement cuts to doctors. To pay for these patches, “offsets” are required elsewhere … and that has left long-term care operators looking at possible reimbursement reductions.

Recently, long-term care lobbying groups and other advocates have successfully presented alternative cost-saving programs to lawmakers, and have been spared the brunt of SGR offsets. Of course, this happy history is not guaranteed to repeat itself. The American Health Care Association made permanent repeal of the SGR, without market basket cuts to long-term care, one of the main objectives of its Capitol Hill fly-in last month. Insofar as the new proposal permanently repeals the SGR system, AHCA and other long-term care advocates should be cheering. But, without a payment plan to consider, there is notable silence from the LTC gallery.

There has been a concrete idea about how to pay for the committees' proposal, from Sen. Jay Rockefeller (D-WV). His plan would affect long-term care but not in the form of reimbursement cuts. He is calling for drug manufacturers to give price breaks to the government for medications that go to people eligible for both Medicare and Medicaid. This “dual eligible” population accounts for 27% of total Medicare/Medicaid spending on long-term care, and 16% of “duals” live in nursing homes.

The Congressional Budget Office estimates that an SGR repeal would cost about $140 billion over 10 years. Rockefeller's Medicare Drug Savings Act is estimated to generate more than $141 billion in that timeframe. So it seems like a potentially workable idea. One problem: The pharmaceutical industry hates it. Is it any surprise that Rockefeller's bill has been languishing in committee since April, given the clout of big pharma (or big PhRMA, more precisely)?

It's a pet peeve of mine when politicians or commentators compare government policy with a household budget, ignoring differences between macroeconomic and microeconomic principles. So I feel a little queasy about how I started this column; I know that comparing my made-up discussion draft of winter plans with Congress' SGR repeal proposal is basically preposterous.

Barring a Mega Millions win, I'm not getting a Tesla in February, while I'm betting there are multiple ways that lawmakers could come up with the money for an SGR repeal, even without having to poke the bear that is the pharmaceutical industry (or slash LTC reimbursements). But this is assuming they can get their act together and cooperate — even compromise. Are the odds of my winning the lottery better?

Consider that the Congressional Commission on Long-Term Care also recently issued a report without an agreed-upon payment plan. This was a group of experts creating a blueprint that Congress would be under no obligation to follow. Even though they were operating in a purely hypothetical realm, members of this panel broke down along predictable political fault lines and were ultimately unable to agree on a shared vision for how to finance their recommended reforms. This suggests that partisan divisions on taxes and spending (and the role of government writ large) are deeply entrenched well beyond the dysfunctional halls of Congress, and provides little hope that an SGR repeal will pass muster when it's time to break out the green eyeshades and hash out dollars and cents.

Still, the pressure to get rid of the SGR has reached a feverish enough pitch, and the fiscal fallout of continued patches has gotten to such a critical stage, that Congress just might muster what it takes to pass a repeal. Like many people in the long-term care community, I hope it happens. And that I'll read about it while I'm lying on a beach in the Galapagos. 

Tim Mullaney is Staff Writer at McKnight's. Follow him @TimMullaneyLTC.

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Daily Editors' Notes

McKnight's Daily Editor's Notes features commentary on the latest in long-term care news. Entries are written by Editorial Director John O'Connor on Monday and Friday; Staff Writer Tim Mullaney on Tuesday, Editor James M. Berklan on Wednesday and Senior Editor Elizabeth Newman on Thursday.

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