Lobbyists Ready to Shift Focus Now That SGR Repeal Has Passed

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By Nathaniel Weixel

May 12 — Health-care lobbyists told Bloomberg BNA that after notching a major victory in April when Congress finally passed a permanent repeal to Medicare's sustainable growth rate formula, their priorities are shifting to many long-standing concerns that were overshadowed by the specter of the SGR.

In a series of interviews, lobbyists for some of the most powerful hospital and physician stakeholder groups said now that the SGR has been repealed, their time and effort can be spent on issues such as preventing an extension of the Medicare sequester, reforming the Medicare delivery system and dealing with the possible fallout if the U.S. Supreme Court strikes down insurance subsidies for the federal exchange.

The SGR law has been passed, “but it's not like we can pop the champagne,” Jeff Cohen, executive vice president, political and public affairs at the Federation of American Hospitals, told Bloomberg BNA.

Steven Stack, president-elect of the American Medical Association, said the law provides stability for the group, and allows it to better focus its considerable advocacy efforts.

Speaking during an April 29 event, Stack said “there's no end to the issues that need to be addressed” in the wake of the SGR repeal, but those issues have always been present. The SGR required almost constant attention because it was such a major, immediate threat to physicians. Lawmakers understood the negative impact of a 21 percent payment cut, but trying to find a solution to the SGR took away from other issues.

“We have more bandwidth now,” Stack said. “It's incredibly important to have everybody turn their attention to what we wanted to do all along.”

Without a repeal of the SGR, physicians were facing a 21 percent Medicare pay cut. The new law replaces the SGR with new value-based systems for establishing annual updates to payment rates for physician services in Medicare.

Sparse Legislation

The SGR repeal law, the Medicare Access and CHIP Reauthorization Act of 2015 (Pub. L. No. 114-10), was “pretty stripped down of extraneous provisions,” Tom Nickels, senior vice president for federal relations at the American Hospital Association, told Bloomberg BNA.

Hospitals were hoping the legislation would include provisions addressing penalties for excess readmissions, audits by Recovery Audit Contractors and a delay of the “two midnight” policy on inpatient hospital stays. Instead, Nickels said those issues remain a threat to hospitals, and the AHA will be focused on making sure they get addressed.

The law authorizes the Centers for Medicare & Medicaid Services to extend the “probe and educate” period of inpatient admission reviews through Sept. 30, but Nickels said broader reforms to the inpatient review policy are needed.

“Probe and educate” allows Medicare Administrative Contractors to review a small sample of inpatient claims for stays lasting less than two midnights—10 for most hospitals and 25 for large hospitals—to see how well hospitals comply with the new admissions criteria.

Spending Spike

Stakeholder groups including the AMA, AHA and America's Health Insurance Plans (AHIP) all spent significantly more money on lobbying in the first quarter of 2015 compared with the first quarter of 2014, according to an analysis of federal lobbying data by research organization MapLight.

For example, the AMA spent $6.72 million in the first quarter of 2015, up from $6.3 million in the first quarter of 2014, and an increase of over 50 percent from the $4.39 million in the last quarter of 2014, according to the data. The AHA spent $4.63 million in the first quarter of 2015, compared with just over $4 million in the first quarter of 2014, while AHIP spent almost $2.9 million in the first quarter of 2015 compared with $2.43 million a year ago. Most individual insurance companies also increased lobbying spending.

Stephen Weiner, an attorney with Mintz Levin in Boston, said a lot of that spike is attributable to getting the SGR bill across the finish line. The SGR wasn't the only issue groups reported lobbying for, but there was a recognition that there was momentum to pass a bill, Weiner told Bloomberg BNA.

Aside from the SGR, the AMA reported lobbying on issues related to electronic health records, Medicare Advantage rates and drug payment policy, among others.

“There's a whole other agenda out there. Risk adjusters, MA rules, the medical device tax—a lot of things that will draw attention that were de-emphasized by SGR,” Weiner said.

But will spending continue at the higher levels from the first quarter? “Probably not. I would be surprised if the spike continued,” but there won't be a large drop, Weiner said.

SGR Trade-Off?

Clifton Porter II, senior vice president of government relations with the nursing home group American Healthcare Association, told Bloomberg BNA he's glad lawmakers were finally able to come together to repeal the SGR formula, which he said was a major, overhanging risk. In the weeks leading up to the bill's final passage, Porter said he and other stakeholders were meeting daily, if not more often, with House committee staff members.

“Everything was [changing] by the minute,” Porter said. “It was a very engaged process. Every provider group was involved.”

But even without the threat of a 21 percent payment cut to doctors hanging over them, Porter said he's concerned the law opened providers to a new threat—using health care as a way to pay for nonhealth-care legislation. That concern was echoed by other provider lobbyists who specifically mentioned the Trade Adjustment Assistance Act (TAA) (H.R. 1892).

The bill includes a 0.25 percent Medicare payment cut in fiscal year 2024, which would extend the sequester on Medicare for the last six months in 2024 and increase the amount cut by the sequester by $700 million, according to Congressional Budget Office estimates. This would result in a net effect of increasing the sequester in 2024 beyond the 2 percent in the Budget Control Act.

“I hope we didn't trade the resolution of SGR—which was an ongoing, but consistent overhang—for an infinite risk window of less predictable, more problematic” threats, Porter said.

Offset Precedent

“The extension of the sequester is pretty disturbing,” Porter said. “It puts us in the mindset that while SGR is a thing of the past, there's a willingness to use health care to pay for things outside of health care. The risk profile increases dramatically.”

The TAA provides, among other provisions, a tax credit to help individuals who have lost their health coverage because of trade agreements purchase health insurance.

“Hospitals are sick of being the piggybank for other priorities,” FAH's Cohen said. “These are moments of fiscal truth,” Cohen said. The post-SGR landscape offers “a number of opportunities for mischief. We're concerned about the precedent and remain vigilant on any efforts to use hospitals to pay for anything” not related to health care, Cohen said.

The SGR repeal law was only partially offset, a fact that dismayed fiscal conservatives. AHA's Nickels said fiscally conservative lawmakers now may be looking to ensure every bill is offset, and if the TAA bill passes with the sequester extension intact, lawmakers will be more willing to cut from health care.

“There are a whole host of other risks in the future—TAA, the debt ceiling, highway funding—where Congress may be looking [at health care],” Nickels said. Providers need to be aware of that, he said.

To contact the reporter on this story: Nathaniel Weixel in Washington at nweixel@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com