One repeal that both Republicans and Democrats can agree on is the need to repeal the sustainable growth rate (SGR) formula used to calculate physician payment updates under Medicare. Both the House and Senate committees with jurisdiction over Medicare have been conducting hearings to examine transitioning physicians to a more value-based system that rewards physicians for quality outcomes and efficiency of care. Most of the witnesses agreed that our payment system needs to improve care coordination, quality and efficiency. Both committees have sought input from physician stakeholder groups on experience with quality improvement programs and ways to transition physicians to a new payment model. Review AGA’s letter to the House Ways and Means Health Subcommittee.

The Ways and Means Committee is currently crafting a proposal with the goal of marking up a bill this summer. All parties agree that Congress must move on repealing the SGR since the Congressional Budget Office scored the repeal at $113 billion, more than half of what the estimate was last year, before the estimate increases.

The AGA will continue to monitor this critical issue to gastroenterologists and will continue to provide input to the committees as they craft their proposals on Medicare payment reform.

Assumes SGR Repeal
Of interest to health-care providers, the budget assumes that the sustainable growth rate (SGR) formula is repealed and replaced with a 0 percent update. The budget also states that physicians should be given a period of several years of stable payments while HHS develops new payment models that tie physician reimbursement updates to participation in quality improvement models that are ultimately based on quality and efficiency. Although this language is not binding, it demonstrates that the administration wants to continue to move toward a more value-based payment system that links payment to quality outcomes.

The language in the president’s budget is very similar to language being developed by Republicans on the House Ways and Means and Energy and Commerce Committee to reform the SGR. The committees have briefed AGA and the physician community on their proposal and have sought our input. AGA submitted comments to the committee recently in which we outlined our concerns and pointed to our development of quality improvement initiatives in gastroenterology with both Medicare and private payors.

Strengthens IPAB
The president’s budget includes language to strengthen the Independent Payment Advisory Board (IPAB), which the AGA has opposed since it was first announced since it will disproportionately impact physicians. The president lowered the target rate that triggers the IPAB to GDP + 0.5 percent. However, AGA continues to oppose IPAB and supports legislative efforts by Rep. Phil Roe, R-TN, and Sen. John Cornyn, R-TX, that would repeal the IPAB (H.R. 351/S.351).

Eliminates In-Office Ancillary Services for Some Services
The president’s budget includes language that would eliminate the in-office ancillary services exception for radiation oncology services, advanced imaging and physical therapy services since the administration states these services are rarely done on the same day. Physicians would have to meet certain accountability measures beginning in 2015 in order to perform these services.

AGA supports the current in-office ancillary services exception to the Stark self-referral laws, but is pleased that the language did not prohibit pathology services, which are integral to many GI practices. The General Accountability Office (GAO) is currently conducting a study on self-referral of pathology services. AGA had the opportunity to meet with the GAO to educate them on the importance of pathology in GI practices for quality improvement, coordinated care and more timely results.

Supports NIH Funding
The budget also includes a $471 million increase to NIH funding for a total budget of $31.3 million. AGA is pleased that the administration recognizes the importance of NIH funding and we will continue to advocate for increases that reflect biomedical research inflation.

Like the congressional budget resolutions, the president’s budget is a non-binding blueprint that reflects the administration’s spending priorities. However, the president and Congress will once again need to negotiate on spending priorities as Congress begins its appropriations process.

Stay tuned for more updates on the legislative priorities of gastroenterology through the AGA Washington Insider and AGA eDigest.

Of particular interest to gastroenterology:

• The CR rescinds $10 million for the implementation of the Independent Payment Advisory Board (IPAB), which was included as part of the Patient Protection and Affordable Care Act (PPACA). The AGA has long opposed IPAB since it would give 16 unelected and unaccountable bureaucrats unprecedented authority over Medicare spending. We support legislative efforts like Rep. Phil Roe’s and Sen. John Cornyn’s legislation (H.R. 351/S. 351) that would repeal IPAB.
• The resolution included a $71 million increase in funding for NIH and included $582.1 million for the Veterans’ Administration’s Medical and Prosthetic research program. The $71 million increase for NIH was pushed by Sen. Barbara Mikulski, D-MD, and the AGA appreciates her efforts at trying to restore some of the funding that was cut from the agency as part of sequestration.

The House and Senate also approved separate and very different budget resolutions before the recess:

• The House passed a budget resolution crafted by House Budget Chair Paul Ryan, R-WI, that repeals PPACA, reforms Medicare into a premium support program, block grants the Medicaid program, lowers corporate tax rates and cuts discretionary spending.
• The Senate rejected the House budget resolution and after many hours of debate, passed a budget resolution for the first time in four years. The Senate budget resolution, crafted by Senate Budget Chair Patty Murray, D-WA, builds on many of the principles in the Simpson-Bowles deficit reduction plan by implementing a mix of spending cuts and tax increases. the proposal includes $493 billion in spending cuts from domestic programs, $240 billion from defense spending and $242 in reduced interest payments. The Murray plan also closes tax loopholes states that tax increases should only come from the wealthiest Americans and biggest corporations. The Senate budget resolution included an amendment to repeal the medical device tax. AGA opposes this 2.3 percent excise tax on medical device companies, which could limit patients’ access to emerging technologies.

Both budget resolutions are non-binding blueprints on spending priorities to help guide the appropriations process. The House, Senate and President Obama will continue to discuss and negotiate the upcoming spending bills to find the government for FY 2014 and try to achieve long-term deficit reduction.

Continue to look for more updates on the budget and appropriations process on the AGA’s Washington Insider.

The AGA applauds the passage of the Hatch amendment, even though it is merely a symbolic gesture since budget resolutions are non-binding documents. The House passed its own budget resolution crafted by Budget Chair Rep. Paul Ryan, R-WI. It reflects Rep. Ryan’s philosophy of reforming Medicare to a premium support program, block granting Medicaid, cutting spending and lowering tax rates. It does not include the device tax repeal. The Senate has already rejected the House resolution and will not likely try to reconcile their differences. The House, which did pass legislation sponsored by Rep. Erik Paulsen, R-MN, that repeals the device tax, will likely try and move that legislation again this year either as a stand-alone bill or as part of a tax reform package.

The AGA will continue to advocate for the repeal of the medical device tax, which will not only hurt patients’ access to groundbreaking technologies, but also hinder innovation of emerging GI device companies. Look for more updates on the budget process and other policy issues impacting gastroenterology on the AGA Washington Insider.

Immediate Effects

Cuts to Medicare are limited to 2 percent and will only impact providers, not beneficiaries. Recently, CMS sent a communication to providers and suppliers informing them that the implementation of the 2 percent cut will occur for all services beginning on or after April 1, 2013. So, all physicians who serve Medicare patients should expect a 2 percent reduction in payments beginning April 1. NIH will see a 5 percent cut, and AGA is carefully monitoring how the agency will implement it. Certainly, the cut will impact the number of grants that NIH is able to fund especially given that its budget has not kept pace with biomedical research inflation.

Despite both parties’ initial opposition to sequestration, there has been no effort to rescind these cuts. Now, it is unlikely to happen unless Congress and the president are able to reach the illusive “grand bargain” on deficit reduction, which they have been unable to for the past few years.

So, What’s Next?

First, Congress needs to pass a continuing resolution (CR) to keep the government running through the end of the fiscal year on Sept. 30, 2013. The most recent CR funds the government until March 27, and last week the House passed H.R. 933, which contains two appropriations bills — Defense and Military Construction-Veterans Affairs — along with the remaining unfinished appropriations bills that would fund the government through the end of the fiscal year. The Senate Appropriations Chair Barbara Mikulski, D-MD, and Ranking Member Richard Shelby, R-AL, have crafted their version of a CR, which includes a $71 million increase to NIH, but leaves the sequestration cuts in place. Sen. Tom Harkin, D-IA, may also offer an amendment to the CR that would add $211 million to the NIH budget, but does not address the underlying sequestration cuts.  The Senate is scheduled to vote on their version this week and hope to have any differences reconciled before they leave town for the spring break on March 22.

This week, House Budget Committee Chair Paul Ryan, R-WI, also released his blueprint for the Republican budget resolution, outlining spending priorities over the next decade. Included in Chairman Ryan’s plan are cuts to Medicare and Medicaid, additional cuts to discretionary spending on top of those mandated by the Budget Control Act, lowering the corporate tax rate to 25 percent, reforming Medicare to a premium support plan, and eliminating the Affordable Care Act. Many of these policies were included in the Republican Presidential platform last fall and it is safe to say that this proposal will be rejected by the Democratically-controlled Senate. The House is expected to vote on Chairman Ryan’s proposal next week.

The Senate Budget Committee Chair, Sen. Patty Murray, D-WA, is also working on a budget resolution that will undoubtedly be different from the House blueprint. By law, both the House and Senate are required to pass a budget resolution by April 15, even though the Senate has not passed one since 2009. This year, however, a bill was passed in February withholding Senators’ and Representatives’ pay unless they pass a budget by the deadline, which may provide a little added incentive. The budget resolutions serve as a blueprint to the appropriations committees as to what they can spend as they craft their spending bills.

Assuming Congress is able to reach an agreement on the current CR, the next budget battle will be over the fiscal year 2014 budget resolutions and the ensuing appropriations process, perhaps sometime late spring.

AGA will continue to monitor this latest budget process and to advocate that the budgets include appropriate funding for NIH and biomedical research, as well as meaningful payment reform for physicians under Medicare. We are monitoring the implementation of sequestration and its impact on providers. Look for more updates in AGA eDigest and the AGA Washington Insider.

Almost everyone I speak with on Capitol Hill is resigned to the fact that sequestration will occur and most agree that nothing will happen to reverse the cuts until the American people start to feel the impact and demand action. There has been talk that Congress could address the cuts when they address the continuing resolution that funds the government through the end of the year, which will expire on March 27.

The Republicans, who months ago were railing against the automatic cuts to defense, have changed their tune and are downplaying the impact that the sequester will have. They feel as though they gave the president his wish on tax increases in the fiscal cliff deal and have not gotten any spending cuts in return. Meanwhile, the White House has been urging Congress to prevent the sequester and craft a more balanced approach that closes tax loopholes to generate more revenue and has been highlighting the impact that the cuts will have across the country.

The stalemate that the Republicans and Democrats are in is the same scenario that has stalled most of the budget talks over the past few years: Republicans are demanding entitlement reform and Democrats are demanding increased taxes.

What do these cuts mean for gastroenterology?

The sequester will mean that physicians taking care of Medicare patients will receive an automatic 2 percent across the board cut. As part of the fiscal cliff deal, physicians were given a year-long freeze, which amounted to a .6 percent increase. Therefore, physicians will now receive a 1.4 percent cut in Medicare reimbursement. Although beneficiaries were exempt from sequestration in terms of increased premiums, additional cuts on providers could impact patient access to care.

The NIH will see cuts of more than 5 percent, which will impact not only our economic competitiveness, but also hinder the next generation of researchers. NIH has indicated that up to 12,000 researchers could be impacted and grants could be cut by more than 5 percent should NIH decide to prevent furloughs for their employees.

Many believe that the impact of sequestration may not be felt right away as the agencies will be phasing in the cuts over the next few months. The key date in the negotiations will be March 27, when the continuing resolution keeping the government funded expires. Congress will have to hash out a plan to fund the government by then or else the sequester will turn into a full-blown government shutdown. As part of the American Taxpayer Relief Act of 2012, the total amount of funding for fiscal year 2013 must be equivalent to fiscal year 2012 funding or an additional sequestration goes into effect. Without a grand bargain, it is unlikely that the appropriations process would be able to fully offset the cuts from the sequestration beginning on March 1.

AGA advocates against these cuts given the impact they will have on patient care and the research community. We meet with members of Congress every day to urge them to take action to address this pending crisis. We will continue to be the voice of gastroenterology on Capitol Hill and keep you abreast as to any new developments on this latest budget impasse.

The drama unfolded over the holidays when House Speaker John Boehner, R-OH, who failed to push through his own “plan B” that would have increased taxes on those making more than $1 million a year, told the Senate to come up with a plan. Senate Minority Leader Mitch McConnell, R-KY, and Vice President Joseph Biden worked on a compromise plan that included increasing taxes on individuals making more than $400,000 a year and couples earning $450,000 a year. The plan also permanently fixed the alternative minimum tax, made changes to the estate tax, and extended the research and development tax credit that was popular among businesses. The deal prevented the Medicare physician payment cut of 26.5 percent for a year and prevented to the automatic spending cuts to NIH and other government programs from being implemented for two months. The plan easily passed the Senate, with 89 senators voting in favor of it. However, up until the last hour on New Year’s Day, it was uncertain whether the House would take up the plan. The House Republicans were divided, and many in leadership opposed the plan since it did not address spending cuts. However, in the end, the speaker brought the bill up for a vote, which ended up passing the House with the majority of Democratic members supporting it.

The deal also was a small victory for registries —  the new law recognizes clinical data registries, such as the AGA Digestive Health Outcomes Registry®, in improving patient care and health-care quality outcomes. Beginning in 2014, physicians can report via registries to adhere to the Physician Quality Reporting System and other federal quality programs.

The AGA, along with other medical specialty societies that also have registries, worked with the House Ways and Means Committee to draft this language to give physicians more options in reporting true quality outcomes data. The House Ways and Means Committee and the Senate Finance Committee have been supportive of registries; this language stemmed from AGA’s testimony to the House Ways and Means Health Subcommittee in July during which we shared many of our quality improvement program initiatives, such as the AGA Registry. Registries would not necessarily have to use National Quality Forum-endorsed measures, although the secretary would have to consider whether the registry adheres to minimum standards related to physician feedback and transparency of specifications and risk-adjustment methodologies. The secretary is also required to consider whether the registry requires the submission of data from participants covered under multiple payors. We will continue to monitor the regulatory process on this issue and remain engaged with CMS as they develop their minimum standards and recognition process.

The initial fight on the fiscal cliff may be temporarily over, but another major budget battle looms as the 113th Congress needs to address raising the debt limit, as well as the automatic spending cuts. Since Congress only focused on the tax portion of the fiscal cliff, spending and entitlement reform will be the focus of the next round of discussions. Medicare reform will undoubtedly be on the table as Congress will be looking for long term savings to the program for deficit reduction. AGA and the entire medical community will continue to advocate that meaningful Medicare reform cannot be achieved without addressing permanent physician payment reform. We will continue to work with our champions in Congress to ensure that the issue is addressed in a comprehensive manner that ensures the long term solvency and stability of the Medicare program.

AGA will also continue to push for adequate funding for NIH and other federal research programs that not only help improve our nation’s health-care delivery system, but also boost our country’s economic competitiveness. NIH continues to be a smart investment for our nation to ensure economic growth and we will continue to convey that message.

We thank all of you who took time out of your busy schedules to make your voices heard during the fiscal cliff debate — you made a difference. We will continue to call on you in the future to help advocate for the science and practice of gastroenterology. Continue to look for updates as this debate continues in the 113th Congress on the AGA Washington Insider and AGA eDigest.

Obama’s offer would also prevent the nearly 30 percent cut in Medicare physician reimbursements scheduled for Jan. 1, 2013, but at this time it is unclear how long the fix would be and at what rate. We have been hearing that a one year freeze to the physician cuts would cost around $25 billion over ten years. Some of the “pay fors” initially discussed for the physician fix were causing some heartburn in the physician community and among hospitals. For example, one idea was to equalize evaluation and management payments in the hospital setting, which is estimated to save $15 billion over ten years. However, the hospitals are adamantly opposed to this, as are primary care physicians.

The physician community has been emphasizing that the Medicare cut needs to be prevented, but that we oppose cutting physicians to pay for physicians. Since the physician doc-fix will likely be part of a larger deficit reduction package, the cost of the fix will need to be offset and Congress will likely look for savings within the Medicare program. So, the physician community again faces a scenario in which Congress will “rob Peter to pay Paul,” and is even discussing eliminating an increase in primary care reimbursement in Medicaid — a telling sign of the times since both sides have been empathetic to primary care’s plight for increased reimbursement at the expense of other specialties. Having said that, it will be nearly impossible for one specialty to receive a bigger increase at the expense of another given Congress’ reluctance to weigh in on deeming values to particular procedures and services.

The speaker has announced that he will also push a “plan B” measure, absent a deal with the president, to ensure that taxes do not go up on households earning below $1 million. The speaker has indicated that he will continue to negotiate with the president, but this plan may give some members of the Republican party cover as a larger package is being ironed out.

The AGA continues to closely monitor this extremely fluid process and will keep you up to date on the latest developments. In the interim, it is not too late to contact your legislators to encourage them to stop the cuts to Medicare physician reimbursements and NIH. We thank those members who have taken the time to reach out to Congress and urge you to continue to do so until a deal is reached that prevents the cuts. You can contact your legislator either via email or through the AGA toll-free hotline at 1-855-806-2387. Learn more about the AGA Virtual Advocacy Campaign.

Stay tuned for more developments on the AGA Washington Insider and AGA eDigest.

When I go to Capitol Hill to meet with members of Congress and their staff, I’m not surprised to hear that no one really knows what will happen since there are really only two people who are negotiating — President Obama and Speaker John Boehner, R-OH. Of course, there have been several members on both sides of the aisle who have taken to the airwaves and the talk shows to speak their opinions; however, only the speaker and the president are negotiating in earnest.

There is a saying that “one cannot keep a secret in Washington,” but so far the negotiations between President Obama and Speaker Boehner have been kept relatively quiet with their surrogates trying to garner support amongst the American people for their respective positions. In fact, because so little has been leaked of the details of the negotiations, many believe they could be close to a deal. The optimist in me hopes that they are close to a “grand bargain” that will address the deficit, spending and taxes and will fulfill the wishes of the American people that both sides work together to address this potential economic disaster for our country. But, being in Washington for more than 20 years and witnessing the last decade makes me second guess that optimism.

So, what does this fiscal cliff mean to gastroenterology and why should you care? First, the annual “doc-fix” needs to be addressed — physicians who care for Medicare patients will see a 26.5 percent cut in payments on Jan. 1 unless the issue is addressed. Ironically, you as physicians have been dealing with your own “fiscal cliff” since 2002 and have yet to see a permanent solution to the broken payment system. However, this year, you also face an additional 2 percent across the board cut to Medicare because of sequestration. The additional cut, when tacked onto the 26.5 percent cut, leaves you facing a nearly 30 percent cut in Medicare reimbursement. These cuts would come on top of even more additional cuts, since physician payments under Medicare have not kept pace with inflation for more than a decade and physicians are now required to adhere to an array of quality reporting requirements that could result in additional penalties.

Sequestration will also make deep cuts to federal funding at NIH for medical research. NIH will be cut by 8.5 percent at a time when funding has not kept pace with biomedical research inflation and at a time of great scientific promise. NIH continues to be a smart investment for the federal government, since investments in NIH contribute to economic growth in the life sciences industry and eventually to improved health-care delivery. Cuts to NIH will lead to job losses at a time when our country cannot afford to lose any.

The AGA continues to run our Virtual Advocacy Campaign through which we are asking you to call on Congress to “stop the cuts.” If you haven’t already, please take a few minutes to call your legislator at 1-855-806-2387 to tell them to take action. Don’t have time for a phone call? Visit the AGA website to send an email or letter to your legislator. Watch my video to learn more.

It is very important for members of Congress to hear from you on these critical issues. Many years ago, when I worked on the Hill as a health-care legislative assistant for a member of Congress, he would always ask how many people we had heard from in the district on a particular issue. Your voice truly does make a difference.

Washington may be the only city in the country that has a fiscal cliff countdown clock on every airing of the local news. I am hopeful that the clock will stop ticking well before Jan. 1, 2013.

At the top of the list is trying to reach a deal to avoid the “fiscal cliff” — the expiring tax cuts that will increase and the automatic spending cuts that will kick in on Jan. 1, 2013, if Congress fails to act. Of interest to gastroenterology, if Congress does not address sequestration, NIH will be subject to an 8 percent cut and physicians will receive an across the board 2 percent cut.

However, physicians have been subject to their own “fiscal cliff” year after year with Congress’ inability to address the broken Medicare physician payment formula; physicians will be subject to a 27 percent cut in Medicare reimbursement if Congress does not address the issue. Of course, congressional leaders have stated that they cannot allow cuts of this magnitude to go into effect and want to reach a deal to prevent not only the physician fiscal cliff, but sequestration as well. The question remains — how will this be addressed? Given the short legislative cycle before the end of the year and the magnitude of the task, Congress could pass a short term fix to prevent the cuts from being implemented and begin negotiations for a larger deal early next year. If a deal is reached, chances are better in 2013 in an off-election year. Post-election, both sides have been positive about the outlook for a deal to address taxes and spending, although it remains to be seen how deep each sides’ heals are dug into their respective opinions.

How can you help?

AGA has been fighting these cuts and plans to launch our first ever AGA Virtual Advocacy Day on Tuesday, Dec. 4, during which we will call on you for help. Please take the time to call your legislators to urge them to take action to stop the cuts. Cuts of this magnitude will have a devastating impact on the science and practice of gastroenterology.

For physician practices, a decline in reimbursement will hinder your ability to pay staff, hire new employees and invest in the infrastructure necessary to participate in federally-mandated quality reporting programs. These cuts come on top of cuts, and threaten the viability of practices throughout the country at a time when more baby boomers are entering the rolls of the Medicare program.

For researchers, cuts of more than 8 percent to NIH will cripple laboratories across the country and hurt an industry that generates good, high-paying jobs. Cuts to research will hurt the research careers of our best and brightest who may not be awarded grants and will hurt established scientists who may have to limit hiring assistants and thwart existing research projects.

Continue to read AGA eDigest and the AGA Washington Insider for more information on AGA Virtual Advocacy Day. We need your help and hope we can count on you to lend your voice for your profession.