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March 26th, 2015
WASHINGTON, D.C.—Congresswoman Anna G. Eshoo (D-Calif.) released the following statement after voting in favor of the Medicare and CHIP Reauthorization Act (H.R. 2), bipartisan legislation to permanently fix the broken system by which doctors are reimbursed for treating Medicare patients. The legislation also reauthorizes the Children’s Health Insurance Program (CHIP) for two years and provides $7.2 billion in funding for community health centers. The House passed the bill today by a vote of 392 to 37.
“Today, a remarkable majority of House Members coalesced around bipartisan legislation to improve health care for seniors, children and low-income Americans,” said Eshoo, a senior member of the Energy and Commerce Committee which oversaw portions of the compromise legislation.
“This legislation delivers in a big way,” Eshoo continued. “It changes the way doctors are compensated for treating Medicare patients, with a focus on quality of care rather than quantity. It ensures millions of children nationwide will continue to be insured under CHIP, and it makes a substantial investment in our nation’s valuable community health centers.”
“Medicare, CHIP and community health centers are the pillars of a healthy America. Today, we fortified these pillars for the millions of Americans who rely on them and for generations to come,” Eshoo concluded.
The Sustainable Growth Rate (SGR) is the payment system created in 1997 to compensate doctors who treat Medicare patients. It was derived from concerns that the Medicare fee schedule would not adequately constrain overall increases in spending for physician fee services. In the first few years of the SGR system, the actual expenditures did not exceed the targets and the updates to the physician fee schedule were close to the Medicare economic index. But beginning in 2002, the actual expenditure exceeded allowed targets, and the discrepancy has grown with each passing year. Congress began passing a “band-aid” fix in order to avoid a reduction in payments to doctors. The last fix by Congress expires April 1st.
H.R. 2 repeals the flawed SGR formula and replaces it with a bicameral, bipartisan plan to move Medicare toward improved value and stability for physician payments. While the cost of permanently fixing the flawed payment system costs $141 billion, one-third of that will come from “offsets,” or revenue increases from other areas.
Changes for Some Medicare Beneficiaries
Under current law, the vast majority of Medicare’s individual beneficiaries pay the standard premium which covers 25 percent of the Part B and Part D program costs. In 2015, the individual Part B standard monthly premium is $104.90; for Part D, the national average monthly premium is $33.13. Today, approximately 6 percent of beneficiaries pay higher premiums for Part B and Part D based on their incomes. Individual beneficiaries with incomes over $85,000, or $170,000 for a couple, currently pay between 35 to 80 percent for their Part B and Part D program costs, depending on their income.
Beginning in 2018, the SGR agreement increases the share of program costs paid by beneficiaries who are already subject to income-related premiums. Individual beneficiaries with incomes between $133,501 to $160,000, or $267,001 to $320,000 for a couple, who currently pay 50 percent of their program costs, will pay 65 percent for both their Part B and Part D premiums. Individual beneficiaries with incomes over $160,000, or $320,000 for a couple, who currently pay 65 percent of their program costs, will now pay 80 percent of their Part B and Part D program costs.
The legislation also limits first dollar coverage on certain Medigap plans by prohibiting plans from covering the Part B deductible. This change will apply only to future retirees beginning in 2020.
H.R. 2 preserves and extends CHIP for two years. This program helps states insure low-income children who are ineligible for Medicaid, but cannot afford private insurance.
Community Health Centers
H.R. 2 provides $7.2 billion for community health centers through 2017. Community health centers are locally-controlled, non-profit entities that provide primary care, dental, behavioral health, and pharmacy services. These centers specialize in providing cost-effective and high-quality primary and preventive health care.
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