Capitol Hill Report: Budget Offsets Could Fix SGR for One Year—or Permanently

January 20, 2012

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By Mike Amery, Legislative Counsel, Federal Affairs, (202) 506-7468, mamery@aan.com

SGR Still Tops Agenda

I just returned from the 10th Palatucci Advocacy Leadership Forum which was held in Austin, TX. Another 30 neurology advocates left excited and energetic to take on the issues of the day—which in Washington seem to never change, with SGR being the prime example.

Fixing the Medicare Sustainable Growth Rate (SGR) formula remains a top issue as we inch closer to the March 1 deadline for congressional action to prevent a 27.4 percent cut in Medicare physician reimbursement. Congress passed a two–month patch in December to prevent implementation of the cuts, but only after dramatic theatrics and a bitter stand–off.

Actually, recent news has been good as Democrats and Republicans have indicated that a Medicare "doc fix" extension should go smoothly this time around and could pass in mid–February, although it would likely be for only one year.

A House/Senate conference committee of 20 members has been appointed to work out the details. (See list below.)

Opposition to Offset Option

The cost of the one–year fix to the SGR is $39 billion. Under the current rules, Congress has to find offsets to fully pay this cost. One place being looked at for savings is hospitals, and in response, the American Hospital Association is mounting a significant lobbying effort in hopes of taking hospital payments off the chopping block. One of the proposed cuts we've heard is for Congress to equalize payments for patients seen in an outpatient setting in the hospital or in a physician's office. Currently, hospitals receive 80–percent greater payment for these patients.

Use Overseas Contingency Operation Funds?

The American Medical Association continues to insist on a permanent SGR fix. In a meeting I attended with many other physician specialties, they supported the use of Overseas Contingency Operation (OCO) funds as an offset to permanently eliminate the SGR. OCO funding is discretionary funds for the wars Afghanistan and Iraq that are part of the Department of Defense appropriations bill. The Congressional Budget Office (CBO) assumes that OCO will be funded of the current year's level for each of the next 10 years. Because operations are winding down the current estimate is artificially high.

What interests me is that the AMA finally has a pay–for that can logically work. Others say it's accounting gimmickry, but if Congress is never going to implement the SGR cut, isn’t that accounting gimmickry as well? A number of senators on both sides of the aisle have stated their support for using OCO funds, but it has yet to be seen if House Republicans will go along with this idea.

Providing a one–year fix just kicks the can down the road again and increases the total cost of repeal. To put this in perspective, in 2005 the cost of a complete SGR repeal was just $45 billion, but in just a few short years from now, the cost of a permanent fix will balloon to $500 billion.

For more information, read the AMA's OCO talking points.

Conference Committee Action

Since the appointment of the 20 members of the House/Senate conference committee to discuss SGR and other tax extenders, we have met with 19 members or their staff. Of course, we are urging them to support a permanent SGR fix but we are also making them aware of our concerns about not including cognitive care in efforts to improve the practice climate for primary care.  The response has been good, especially with the offices of the Senate conferees including Sens. John Barrasso (R–WY), Michael Crapo (R–ID), Jon Kyl (R–AZ), Max Baucus (D–MT), and Bob Casey (D–PA).

We have concerns, however, because one of the House conferees is Rep. Allyson Schwartz (D–PA), who continues to push for payment reforms that only benefit primary care providers.

We also continue to work with Congressional leadership. For example, last week I got some time to discuss this issue with two key house Democrats, Rep. Pete Stark (D–CA), ranking member of the House Ways and Means Health Subcommittee and Rep. Frank Pallone (D–NJ), ranking member of the House Energy and Commerce Health Subcommittee.

AAN Member William C. Mobley, MD, PhD, Honored

On December 8, William C. Mobley, MD, PhD, Distinguished Professor and Chair of the Department of Neurosciences at the University of California San Diego, was awarded the International Sisley–Jérôme Lejeune Prize, in Paris, France, for his therapeutic research on genetic intellectual disabilities.

Congressman Pete Session (R–TX) recognized Dr. Mobley on the House floor for the award and for his contributions in the field of Down Syndrome. The statement from Rep. Sessions, who is the father of a child with Down Syndrome, can be read here.

“Who Would Want This Job?”

In closing, I was talking recently to a member of Congress and I asked him if he expected to draw a primary opponent. The answer was “no” but the reason surprised me. “Who would want this job?” said the congressman. Congress’ current favorable rating is around 14 percent (and a big question is who those 14 percent are!), so the answer probably makes some sense. So far, 16 members of Congress are outright retiring and are not seeking other office. For those of you joining us at Neurology on the Hill in late February, we will be treated to a presentation by election guru Stuart Rothenberg, who is sure to discuss this trend.

The conference committee list includes:


House Republicans

Dave Camp (MI)
Fred Upton (MI)
Kevin Brady (TX)
Renee Ellmers (NC)
Nan Hayworth (NY)
Tom Reed (NY)
Tom Price (GA)
Greg Walden (OR)

Senate Republicans

Jon Kyl (AZ)
Sen. Mike Crapo (ID)
John Barrasso (WY)

House Democrats

Chris Van Hollen (MD)
Sander Levin (MI)
Xavier Becerra (CA)
Allyson Schwartz (PA)
Henry Waxman (CA)

Senate Democrats

Max Baucus (MT)
Ben Cardin (MD)
Jack Reed (R.I)
Bob Casey (PA)