Alexander Votes to End Threat of Payment Cuts to Doctors Who Serve Medicare Patients

WASHINGTON, D.C., April 14 – U.S. Senator Lamar Alexander (R-Tenn.) today voted for the Medicare Access and CHIP Reauthorization Act, legislation that will 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.

“This legislation will permanently end the threat of payment cuts to doctors serving Medicare patients in Tennessee and throughout the country,” said Alexander, chairman of the Senate health committee. “It 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 continuing my work with members of the Tennessee delegation on a permanent solution for Tennessee hospitals that provide care for those who need help the most.”

The legislation passed by a vote of 92-8 and, having passed the House in March, heads to the president’s desk for his expected signature.

The legislation repeals Medicare’s formula, known as the Sustainable Growth Rate or “SGR,” 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 worked alongside members of the Tennessee delegation to help ensure that the bill would also include funding for Tennessee’s 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. 

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 Senate today includes two provisions similar to the Medicare reforms proposed by the senators in their fiscal plan.

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