‘Extremely disappointed’ in SGR repeal delay, AMA & AHA implore Senate to act

The American Medical Association (AMA) expressed extreme disappointment after the Senate failed to pass a bill that would repeal the sustainable growth rate (SGR) before it recessed for over two weeks. The repeal of the SGR, which currently is set to dramatically reduce physician payment rates on April 1, 2015, was expected after a bipartisan bill was passed by the House of Representatives last week (see House passes SGR repeal, Health Law Daily, March 26, 2015). The American Hospital Association (AHA) joined the AMA’s plea for action on the bill as soon as the Senate reconvenes. The Senate previously expressed that it would consider the bill on April 13, 2015 (see Overworked from budget passage, Senate recesses before SGR repeal vote, Health Law Daily, March 27, 2015).

The bill

Currently, the SGR requires cuts to Medicare payments to physicians whenever spending exceeds previously set targets and, if not repealed, this provision would translate into payments to physicians being reduced by more than 20 percent. In the past, temporary fixes to reduction have been adopted but a recently proposed bipartisan bill, H.R. 2, would repeal the SGR entirely and, instead, increase payments from July through December of 2015 and in each calendar year through 2019 by 0.5 percent (see New bipartisan bill would wipe out SGR, extend CHIP, and add laundry list of changes, Health Law Daily, March 24, 2015). The bill, if enacted, would also: (1) extend the Children’s Health Insurance Program through 2019; (2) extend the 1.0 floor of the Geographic Practice Cost Index, the ambulance add-on payment, and the Medicare rural home health add-on; and (3) make permanent certain extensions of Medicaid programs and payments.

Action, and lack thereof

On March 26, 2015, the House passed H.R. 2 by a vote of 392 to 37. After the vote on the bill, which was not split along party lines, the President announced his intention to sign it if it passed the Senate. However, the next day, when it was to be considered on the Senate floor, the body announced that it would not hear take action on it until after its recess, which is to last over two weeks. The delay in hearing the proposed legislation was thought to be caused by the lengthy session that eventually resulted in the passage of a Senate budget resolution.


In their press release, the AMA commented on the delay, stating the following: “The [AMA] is extremely disappointed that the U.S. Senate did not vote on the Medicare and CHIP Reauthorization Act (MACRA) before leaving for recess today. Their failure to act leaves physicians facing a devastating 21 percent cut in Medicare reimbursements when the current [SGR] payment patch expires on March 31.” The AMA further “urged” the Senate to consider the bill again immediately on return from recess. The AHA wrote a letter to the Senate, dated March 26, that stated it was in support of the Senate’s confirmation of a permanent fix to the SGR in the form of the repeal. Rich Umbdenstock, President and CEO of the AHA, commended the legislature on the drafting of the bill, writing, “While we are disappointed that hospitals would looked to as an offset given that Medicare already pays less than the cost of delivering services to beneficiaries, the package strikes a careful balance in the way it funds an SGR repeal and embraces a number of structural reforms to the Medicare program.”

Alzheimer’s patients ill-informed, need to be ready for positive developments

Alzheimer’s disease has been the focus of medical research for decades. This devastating disease attacks the brain and results in the loss of memories and impairment of cognitive functions to the point of negatively impacting daily life. It is a progressive illness, starting with signs like poor judgment, personality changes, and getting lost. As the disease becomes severe, patients are typically unable to function normally and will spend most of their time in bed as their body begins to shut down. There is no cure for the disease, despite the best efforts of researchers. Still, developments are constantly in the works to get ever closer to that elusive answer.

The fountain of youth – in a pill?

Researchers are forming a trial to test treating elderly participants with metformin, a common type 2 diabetes drug. The goal is to see if this drug will also prevent or delay the formation of other chronic diseases. Those designing the trial hope that the FDA will be motivated to consider aging a preventable condition, which would in turn cause pharmaceutical companies to develop more drugs that help combat the negative effects of aging.

The project came together after a study compared how long those taking metformin lived compared to those taking another common diabetes drug. People taking metformin lived longer than those taking sulphonylurea, as well as some of the nondiabetic control population. Metformin targets chemicals produced by certain cells that develop as people age or at the site of age-related diseases like the brain, which is affected by Alzheimer’s disease.

Project planners feel that the best way to fight the negative aspects of aging is to approach the entire biological process. Simply preventing one disease might allow people to live longer, but that increases their risk of developing another major illness. The goal of the research is to improve the final years, maybe even decades of life.

 Restoring memories using ultrasounds

Alzheimer’s is associated with the buildup of a certain type of plaque in the brain that blocks neuron connections. Efforts at removing this plaque from the brain with drugs have proven ineffective, but Australian researchers have discovered a possible alternative. When high frequency sound waves generated by scanning ultrasound reached the brains of affected mice, microloglial cells that act as an immune protector of the central nervous system consumed the toxic plaque. Following the treatment, the researchers made an exciting discovery – memory function was restored to that of healthy mice. They are uncertain if the removal of plaque will also restore functions like motor control and decision-making, but are continuing to test the treatment method to better understand its effects.

This noninvasive treatment could avoid the use of expensive drugs and provide an inexpensive treatment plan for the aging population. Although human trials are expected to be at least two years away, a large ultrasound machine is being developed that would allow testing to be conducted on sheep. Researchers are also exploring the possibility of treating other neurodegenerative conditions with this method.

Patients left out of treatment decisions

These new developments are promising, but a recent study reveals alarming news about patient involvement in their own care. The Alzheimer’s Association found that over half of patients and their caregivers have never been informed by doctors that they have developed the disease. Thousands of Medicare beneficiaries completed annual surveys that were compared to their Medicare claims. Only 45 percent of patients with an Alzheimer’s diagnosis on claim forms had been told of their condition, and 53 percent of caregivers completing surveys for the Alzheimer’s patient knew of the diagnosis. This is a stark contrast to more than 90 percent of patients with cardiovascular diseases or various cancers being informed of their diseases, and 72 percent of beneficiaries with Parkinson’s.

Beth Kallmyer, vice president of constituent services for the Alzheimer’s Association, felt that the lack of transparency “means that people are being robbed of the opportunity to make important decisions about their lives.” Other experts find that patients are relieved to have a confirmed diagnosis after suspecting that something was wrong. Physician guidelines recommend that the diagnosis is given delicately, but in terms clear enough to set expectations and provide options. As more treatment methods are developed and science hopefully approaches a cure, patient awareness and involvement are necessary.

Overworked from budget passage, Senate recesses before SGR repeal vote

The Senate is going to wait more than two weeks before its takes action on a bill to repeal the Medicare sustainable growth rate (SGR) and avoid an imminent 21 percent cut in Medicare payments to physicians. Despite the fact that the physician pay cuts are scheduled to take place on April 1, 2015, Senate Republican and Democratic leaders announced that they would not take up the SGR issue until April 13, 2015. There was some advance warning for Medicare physicians. On March 24, 2015, CMS emailed physicians to warn them that the agency was preparing to implement the payment reduction as of April 1, 2015. At that time, CMS informed doctors that it would update them again on April 11, 2015 (see Countdown to April 1: CMS, docs prepare for cut in case SGR isn’t fixed, Health Law Daily, March 25, 2015).

H.R. 2

On March 26, 2015, the House passed H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015. If enacted, the bill would make changes to the Medicare physician payment system, notably through the SGR repeal, but would also extend several other expiring Medicare provisions. Additionally, the bill would make permanent certain Medicaid benefits, including the benefits for “qualified individuals” and the transitional medical assistance program (see House passes SGR repeal, March 26, 2015)


Following the House passage and President Obama’s endorsement of the bill, all that remains for final approval is a Senate vote. However, on Friday, the Senate took up a long session that led to the passage of the Senate budget resolution (see House passes budget, Senate to vote, and ACA remains in the crosshairs, Health Law Daily, March 26, 2015). Now, the Medicare payment issue will have to endure a two-week lapse, while Senators take a recess, before it goes under further consideration. Despite the time lag, Senate Majority Leader Mitch McConnell (R-Ky) indicated that the delay would not result in lower payments to Medicare physicians, explaining that the lag time that is inherent in Medicare payment processing means that the payment fix can be done a little late.


The Senate has received some backlash as a result of its decision not to move ahead with the SGR repeal immediately. Congressman Kevin Brady, (R-Texas) had strong words for the decision, saying “The Senate shouldn’t have left town without acting. I embrace the assurances they’ll act next month, but it’s hard to find an adequate reason for leaving our local Medicare seniors and doctors in yet another lurch, or delaying the first real reforms to save Medicare for the long term.” Additionally, the American College of Physicians (ACP) expressed disappointment that the Senate took a recess before passing the legislation and said that “doctors and patients must hold the Senate accountable for not passing SGR repeal.”

Kusserow on Compliance: Advice on selecting an Independent Review Organization (IRO)

The HHS Office of Inspector General (OIG) has over 300 active Corporate Integrity Agreements (CIAs) in force. They result from a settlement of a civil false claims case with the Department of Justice (DOJ). Under a CIA, a provider or entity consents to certain defined obligations as part of “the civil settlement and in exchange for the OIG’s agreement not to seek an exclusion of that health care provider or entity from participation in Medicare, Medicaid, and other federal health care programs.” The CIAs normally are five years in duration and include requirements for an Independent Review Organization (IRO) to ensure compliance with its terms and requirements that include addressing the specific issues that gave rise to the settlement (physician arrangements, off-label use of drugs, inappropriate billing, or marketing practices, etc.).

Financial audits are not normally part of the agreement; as such, IROs usually are firms with expert health care consultants, rather than financial auditors. IRO selection is a critical decision process that should not be taken lightly. The wrong IRO can also prove to be a very costly both in terms of what they charge and how they perform their services, but also in the credibility and quality of their work. It is the responsibility of the entity, not the OIG, to select the IRO. The OIG does not provide advice on how to select one or endorse any organizations to be the IRO, however it reserves the right to approve or deny the entities or provider’s choice of IRO, if found deficient in meeting its guidelines. This is done within 30 days after it receives written notice of the identity of the IRO. Any problems the OIG finds with an IRO will reflect badly on the organization and could aggravate matters.

Thomas Herrmann, J.D., is an expert without peer with regards to IROs, as result of having been previously responsible on behalf of the OIG for negotiating CIAs and monitoring compliance; and subsequently, as years of experience as a consultant involved in more than a dozen IRO engagements. He offered the following advice in selecting the right IRO to oversee an organization’s compliance with the terms and conditions of a CIA:

  • Select a firm that is highly experienced as having served as an IRO to ensure effective reporting and communication with both the entity and the OIG. Expecting a firm to have so served as an IRO six or more times is not unreasonable.
  • Find a firm with many years of health care experience, the more the better, in the particular healthcare sector (there is a huge difference between a provider, managed care organization, and a pharmaceutical manufacturing company). This should not be a learning opportunity at the entity’s expense.
  • Ensure the prospective IRO has the specific qualifications and expertise to properly address the specific scope of work under the CIA. These vary considerably and the more complex a case, the more important that the IRO be highly experienced in that area. Absence of program expertise can lead to hidden costs in learning the business and may result in difficulties meeting the obligations and possibly in terms of credibility in the eyes of the OIG.
  • Require references where the prospective IRO served in that capacity in the past to find out what kind of job they have done, professionally, competently, reasonably, and without up charging unreasonably over their estimate.
  • Avoid a “bait and switch” wherein the people negotiating to become the IRO are quickly switched to lesser qualified individuals to perform the work. Insist on the prospective IRO to specifically identify the key persons assigned to the engagement, along with their personal qualifications.
  • Require written attestation that they have no conflicts of interest problem. The OIG has enumerated many examples of conflict of interest, but, in short, this means that the IRO cannot be involved in reviewing any work in which they had a role in developing and must not have their work conflict with any previous work they have done with the entity. Even the appearance of conflict can be a serious problem.
  • Require the IRO to agree in writing that they will meet the OIG required General Accountability Office (GAO) “Generally Accepted Government Audit Standards” for operational reviews. Operational reviews and financial reviews are dealt with separately in those standards.
  • Fee rates and charges can range considerably and it is important to consider that cost right alongside of experience, professionalism, and industry knowledge.

For more information on this topic, please consider registering for the upcoming WK webinar, “CIA Lessons Learned—Negotiating Terms, Selecting an IRO, Meeting Obligations”, featuring Richard Kusserow.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.