March 19, 2015

U.S. House of Representatives
Washington, D.C. 20515

Dear Representative:

On behalf of the millions of members and supporters of the National Committee to Preserve Social Security and Medicare, I am writing to share our views on the legislative package being developed by Republican and Democratic leaders in the House of Representatives to permanently replace the flawed sustainable growth rate (SGR) formula used to determine Medicare payments to physicians and other providers.

A top priority on the National Committee’s legislative agenda is to reform Medicare provider payments by replacing the SGR volume-based payment system with one that rewards quality, efficiency and innovation. We support the bipartisan, bicameral legislation, developed in the last Congress and being considered as part of the current leadership package, that moves toward a payment system based on quality of care and care coordination, which is especially important for beneficiaries with multiple chronic conditions.

While the National Committee supports the payment system reforms in the House leadership package, we oppose plans to pay for nearly half of the offsets in the bill by increasing costs for Medicare beneficiaries. Most of this offset would come from further means testing Medicare Part B and D premiums. Higher-income Medicare beneficiaries are already paying more and expanding Medicare premium means testing further erodes the social insurance nature of the program. And, it reaffirms our concern that ongoing interest in using means testing as an offset will result in more middle class seniors shouldering the cost of higher premiums.

Cost savings would also be achieved by requiring Medigap plans to have a deductible. These policies are purchased by middle and lower-income beneficiaries to ensure their health care costs are affordable and predictable. Making Medigap coverage less comprehensive could cause some people to forgo necessary care, which could lead to higher health costs down the road. Even without the offsets paid by beneficiaries, the Kaiser Family Foundation estimates that Medicare beneficiaries would automatically contribute $58 billion over the next ten years in Part B premiums to replace the SGR.

In addition, our support for SGR legislation has been contingent on including provisions to make the Qualified Individual (QI) program and the therapy cap exceptions process permanent. From what we understand, the leadership package would make the QI program permanent, but not the therapy cap exceptions process.

The National Committee calls on House leaders to perfect the SGR package by dropping plans to require seniors and people with disabilities to pay more for Medicare. To that end, we suggest other offsets to the legislation. For example, we support restoring rebates from drug manufacturers for the drugs used by individuals who are dually eligible for Medicare and Medicaid and for people receiving the Medicare Part D Low-Income Subsidy (LIS). Additional offset proposals we support include increasing manufacturer discounts for brand name drugs in Medicare Part D to 75 percent, effectively closing the coverage gap “donut hole” for brand name drugs in 2017, three years sooner than under current law; promoting lower pharmaceutical costs by providing for faster development of generic versions of biologic drugs; and prohibiting “pay-for-delay” agreements between brand name and generic pharmaceutical companies that delay entry of generic drugs into the market which would provide prescription drug savings and would lower costs for beneficiaries.

Repealing and replacing the flawed SGR formula is important for Medicare providers, and it is important for Medicare beneficiaries who are concerned about losing access to their doctors. We look forward to working with Congress to develop a package that repeals SGR and that also makes important extenders permanent and does not increase payments to physicians at the expense of beneficiaries.


Max Richtman
President and CEO