February 15

Senator Lautenberg (D-NJ) to Retire in 2014

On Thursday, Senator Frank Lautenburg (D-NJ) announced that he will not seek re-election. Lautenberg, at 89 years old, is the oldest currently-serving U.S. Senator. Newark mayor Cory Booker (D-NJ) and Congressman Frank Pallone (D-NJ) have both been mentioned as potential front-runners for the seat’s Democratic candidacy.

February 11

CBO’s Budget Outlook Lowers Price Tag for SGR Repeal

On Tuesday, the Congressional Budget Office (CBO) released a new update for its budget and economic outlook which outlined its projections for fiscal years 2013 to 2023. According to CBO, the cost of repealing the Medicare sustainable growth rate (SGR) formula would be $138 billion over the next decade – a significant decrease from CBO’s November estimate of $244 billion and its $316 billion estimate last February. CBO also predicted slower rates in growth of health care costs, largely due to lower spending for physicians’ services in recent years.

CBO also updated several of its estimates regarding the Affordable Care Act (ACA). CBO changed its prediction of enrollment in health exchanges, estimating that about 7 million people will enroll in 2014 compared with its previous estimate of 9 million. Due to a decline in marginal tax rates which reduce the tax benefit of employer coverage through ACA, CBO says 7 million fewer people will have employer-based coverage. CBO expects 8 million people to enroll in Medicaid in 2014, and increased the ten-year cost of Medicaid expansion from $1.2 trillion to $1.3 trillion.

The report analyzed the budgetary effects of the year-end fiscal cliff legislation, estimating the deficit for FY 2013 will be $845 billion if current policies are maintained and sequestration cuts are implemented in March, or $887 billion if sequestration is avoided. Deficits will fall for the next few years but rise again to $978 billion by 2023, even if sequestration takes effect. CBO underscored that sequestration would have the most significant impact for domestic appropriations and defense programs.

The full CBO report is available HERE.

February 11

House Members Present Proposals for SGR Repeal

CBO’s prediction this week of a lower cost for repeal of the Medicare sustainable growth rate (SGR) formula was viewed by lawmakers as an opportunity to engage in productive conversations and proposals to repeal and replace the flawed physician payment formula. According to CBO, the cost of repealing the Medicare sustainable growth rate (SGR) formula would be $138 billion over the next decade – a significant decrease from CBO’s November estimate of $244 billion and its $316 billion estimate last February.

On Wednesday, Congresswoman Allyson Schwartz (D-PA) and Congressman Joe Heck, D.O. (R-NV) introduced H.R. 574, the Medicare Physician Payment Innovation Act of 2013. The bill is similar to a measure the duo introduced last year, but does not include last year’s proposal to utilize savings from winding down spending in Iraq and Afghanistan to offset the cost of repealing the SGR. H.R. 574 would permanently repeal the SGR formula and replace it with an alternative value-driven fee-for-service formula. Payment levels would be sustained through 2014 followed by a five-year transition period to a new payment model, and providers would be allowed to voluntary test new models until a new model is effective in 2019. From 2015 to 2018, primary care physicians would receive a 2.5% annual rate increase while all other physicians would receive a 0.5% rate increase.

The Schwartz-Heck bill is similar to a proposal outlined by House Ways and Means Republicans last week. The proposal was revised this week after the release of CBO report. Other House Republican leaders including Energy and Commerce Committee Chairman Fred Upton (R-MI)and  Energy and Commerce Health Subcommittee Chairman Joe Pitts (R-PA) announced their support for the framework which would implement repeal in the following phases:

  • Phase 1:  Repeal the SGR and provide a period of predictable, statutorily-defined physician payment rates;
  • Phase 2:  Reform Medicare’s fee- for- service (FFS) physician payment system to reward physicians who provide high quality care; and
  • Phase 3:  Build upon the improvements made in Phase 2 by also rewarding physicians who deliver efficient care.

The House Ways and Means and Energy and Commerce Committees are accepting feedback on the framework until February 25 at SGRComments@mail.house.gov . The Energy and Commerce Health Subcommittee will hold a hearing on Medicare physician payment next week on Thursday, February 14.

A summary of H.R. 574 is available HERE.

February 11

Lawmakers Introduce Bills to Repeal the Medical Device Excise Tax

This week, two bills to repeal the 2.3% medical device excise tax were introduced with bipartisan support in the House and Senate.

On Wednesday, Congressmen Erik Paulsen (R-MN) and Ron Kind (D-WI) introduced H.R. 523 repealing the medical device tax. The bill was introduced with 178 cosponsors, 158 Republicans and 20 Democrats.

On Thursday, the Senate bill, S. 232, was introduced by Senate Finance Committee Ranking Member Orrin Hatch (R-UT) and Senator Amy Klobuchar (D-MN). The pair was joined by Senators Richard Burr (R-NC), Pat Toomey (R-PA), Dan Coats (R-IN), John Cornyn (R-TX), Joe Donnelly (D-IN), Bob Casey (D-PA), and Al Franken (D-MN) in cosponsoring the bill upon introduction.

The bills are identical and do not include an offset for the estimated $29 billion cost of repealing the tax over ten years.

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