Alexander, Corker Praise House Passage of Bill to Permanently End the Formula Threatening Medicare Payment Cuts to Physicians

Legislation includes 10 years of funding for Tennessee program that helps hospitals cover the costs of caring for low-income patients

Posted on March 26, 2015

WASHINGTON, D.C., March 26 – U.S. Sens. Lamar Alexander (R-Tenn.) and Bob Corker (R-Tenn.) today praised House passage by a vote of 392 to 37 of the Medicare Access and CHIP Reauthorization Act, legislation that permanently put an end to the formula, passed by Congress in 1997, that dramatically capped Medicare payments to physicians and has since been temporarily overridden by Congress 17 times. The bill also includes 10 years of funding for Tennessee’s Medicaid disproportionate share hospital (DSH) program, which helps Tennessee hospitals cover the costs of caring for low-income patients. 

“I’m glad to see the House has passed a bill that will permanently end the threat of payment cuts to doctors serving Medicare patients in Tennessee and throughout the country,” said Alexander. “This legislation also includes an important measure to fund Tennessee’s Medicaid DSH program for the next ten years and reimburse Tennessee hospitals, which provided more than $2.4 billion in unreimbursed services to Tennesseans last year alone. I look forward to supporting this bill in the Senate, as I continue to work with Sen. Corker on a permanent solution for Tennessee hospitals who provide care for those need help the most.” 

“While this legislation is not perfect, I’m pleased the House-passed bill finally provides a permanent ‘doc fix’ solution, delivers much needed stability for Tennessee patients, hospitals and health care providers, while also making some long-term reforms to our nation’s Medicare program,” said Corker. “Senator Alexander and I have long advocated for similar changes, and while I believe much more needs to be done to put our nation on a path to fiscal solvency, I learned long ago never to say no to even modest reforms.”  

The legislation passed by the House today repeals Medicare’s SGR formula—which was passed by Congress in 1997 to cap physician payments if Medicare spending exceeded annual targets, and has threatened such dramatic cuts in physician payments that it has been overridden by Congress 17 times since 2003. The bill replaces the formula with a bicameral, bipartisan solution to pay physicians for high quality care. 

Alexander and Corker worked alongside members of the Tennessee House delegation to help ensure that the bill would also include funding for Tennessee’s disproportionate share hospital (DSH) program, which helps Tennessee hospitals cover the costs of caring for low-income patients. Funding for the state’s DSH program for the next 10 years was included in the overall package, which now heads to the Senate for consideration. 

Tennessee is the only state in the nation that does not have a permanent Medicaid DSH program allotment. When TennCare was created through a waiver in 1994, the state agreed to eliminate the Medicaid DSH payment, believing the majority of the uninsured and uninsurable would be covered through the new TennCare. Unfortunately, costs began to escalate quickly and continue to grow, and by 2005, the TennCare coverage experiment ended.

Tennessee hospitals provided more than $700 million in unreimbursed TennCare costs last year. In addition to the unreimbursed costs, Tennessee hospitals provided $970 million in charity care and lost an additional $730 million on services provided to Medicare enrollees. This resulted in over $2.4 billion in unreimbursed cost from charity care and government funded health care programs.

In 2013, Alexander and Corker introduced the Fiscal Sustainability Act to reduce the growth of mandatory spending on Medicare, Medicaid and Social Security. The bill passed by the House of Representatives today includes two provisions similar to the Medicare reforms proposed by the senators in their fiscal plan. 

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