SGR repeal could have damaging side effects for Med Supp producers: NAMSA leader
Many active members of Insurance Forums are in the Medicare Supplement business. Recently, the House of Representatives held two back-to-back hearings on a repeal of the SGR (Sustainable Growth Rate), the basic payment formula for physicians, which has been in force for 10 years. During that time, there have been 17 of what are known as “doc fixes” or “patches.”
The stated purpose of the hearings, entitled, “A Permanent Solution to the SGR: The Time is Now,”was to develop a plan to either repeal SGR, or replace it with some other physician payment plan.
That, in and of itself, would seem fairly simple, but even though everybody in the hearings agreed that SGR needs to repealed — and the sooner the better in view of a March 31 date, when another patch would be needed — the problem is in what lawmakers refer to as“offsets,” or “pay fors.”The CBO maintains that elimination of SGR would cost about $140 billion over 10 years— and that is where the problem rears its head. How do we pay for this repeal?
Unfortunately, several of the testaments included language to introduce “cost sharing,” which is really “cost shifting” to Medicare beneficiaries through several changes in Medicare itself, and Medicare Supplements in particular. Those proposals would affect 11 million people with Med Supps, and directly affect over6.5 million who have Plans C and F.
Recently, one of the Forum’s more active members, “cadylou,” presented you with a summary of what this means in a thread titled, “Congress looking at limiting Medigap options,” and it received quite a bit of follow-up among members.
Now I invite you to read a more in-depth summary of the hearings and their potential implications, culled from the Jan. 27 NAMSA Newsletter, penned after watching more than 5 hours of hearings and then digging into written testimony.
March 31 deadline looms for patch or repeal
The hearings were held on Jan. 21-22 in front of the Committee on Energy and Commerce, Subcommittee on Health. The presiding officer was Health Subcommittee Chairman Joe Pitts, with Energy and Commerce Committee Chairman Fred Upton offering opening statements.
As they did last summer, the committee chose three liberal-leaning people to provide testimony the first day. Former Senator Joe Lieberman, Alice Rivlin of the Brookings Institution, and Marilyn Moon of the American Institutes for Research.
So, a hearing on repealing SGR legislation is something we have called for, and it should not affect us, right? Wrong. I really didn’t believe that Congress would address SGR this soon, but as Mr. Pitts said, “This was the first Committee Hearing on the issue” only about 14 days into the 114th Congress — so they are on it. The March 31 deadline for a repeal or another patch is on their minds — front and center.
Here’s the scenario. Congress must act on a repeal or a patch within about 60 days, and of course the Senate must go along, and the President must sign the bill. Nobody, and I mean nobody in either of the two sessions argued in favor of letting the issue lie, and all committee members, testifiers and anybody in the room said that SGR must be repealed NOW. Seems pretty simple — just pass legislation to repeal SGR.
But, that’s not quite how it works. One of the testifiers used the old, “The devil’s in the details” quote, and it was meaningful. So, here’s the devil: Most committee members (and Lieberman) feel the SGR repeal can’t be achieved without “offsets” or “pay fors,” which the CBO has calculated to be $140 billion over 10 years.
OK, so what are the offsets? Well, those are suggestions as to how to pass this with a variety of theories regarding how $14 billion can be “saved” by cutting Medicare expenses, and restructuring Medicare payments. (Of course, everyone — committee members and respondents — all made the statement, how can we do this without hurting beneficiaries?)
There were probably a dozen ideas presented as to how to achieve “pay fors,” including quite a bit of comment from committee members on the second day as to whether “pay fors” are really necessary. As in, why can’t we just pass this and let the “pay fors” develop over the next several years? Somehow, I agree with this position, knowing full well, as they do, that it adds to the federal debt. I say that in view of some of the offsets what were presented.
• Care to comment about the implications of Medicare restructuring for agents? Please visit this new thread.
Next page: mythbusting; the hospital lobby
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