H.R. 2, Medicare Access and CHIP Reauthorization Act of 2015

H.R. 2

Medicare Access and CHIP Reauthorization Act of 2015

March 26, 2015 (114th Congress, 1st Session)

Staff Contact

Floor Situation

On Thursday, March 26, 2015, the House will consider of H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015, under a rule.  H.R. 2 was introduced on March 24, 2015 by Rep. Michael Burgess (R-TX).

Bill Summary

H.R. 2 repeals the Medicare Sustainable Growth Rate (SGR) formula and replaces it with a formula that returns stability to Medicare physician payments.  The proposal would institute a 0.5 percent payment update every year for five years, and would improve the fee-for-service system by streamlining Medicare’s existing web of quality assurance programs into one value-based performance program, (moving away from the current volume-based system).  The Medicare Payment Advisory Commission (MedPAC) is required to submit reports to Congress in 2019 evaluating the impact that the 2015-2019 payment updates have on beneficiary access and quality of care.  The report to Congress is required to include recommendations regarding further updates.  A full summary of the SGR repeal and replace package can be found here.

This legislation also extends all of the extenders included in the Protecting Access to Medicare (PAMA) Act of 2014, and provides funding for Community Health Centers through 2017.[1]  The bill also extends the existing Geographic Practice Cost Index (GPCI) floor until January 1, 2018, in order to boost payments for physicians in areas where labor costs are lower than the national average.[2]  H.R. 2 also extends the add-on payment for ground ambulance services, including in super-rural areas, until January 1, 2018, and also extends the three percent add-on to payments made for home health services provided to patients in rural areas until January 1, 2018.[3]  Additionally, this legislation extends permanently the Qualifying Individual (QI) program, which helps low-income seniors pay their premiums, and permanently extends the Transitional Medical Assistance Program (TMA), which helps families on Medicaid maintain their coverage for one year as they transition from welfare to work.[4]

This legislation also extends full funding for the Children’s Health Insurance Program (CHIP) through Fiscal Year 2017.[5]  Moreover, this legislation requires the HHS Inspector General to study program integrity related to the Express Lane Eligibility Program and report to Congress within 18 months.[6]

There are a number of policies included in this legislation that reduce its cost, including:

  • Medigap Reform: This legislation limits first dollar coverage on certain Medigap plans by prohibiting plans from covering the Part B deductible. Under current law, some Medigap plans provide first-dollar coverage for beneficiaries, meaning that the plan pays both the deductibles and the copayments.  The change in law proposed by H.R. 2 would take effect to any plans sold to new beneficiaries starting in 2020.[7]
  • Income-Related Premium Adjustment: This legislation would, starting in 2018, increase the percentage that beneficiaries pay toward their Part B and D premiums in two income brackets (approximately 2 percent of beneficiaries): for individuals with income between $133,500 and $160,000 ($267,000-$320,000 for a couple), the percent of premium paid increases from 50 percent to 65 percent; for individuals with income between $160,000 and $214,000 ($320,000-$428,000 for a couple), the percent of premium paid increases from 75 percent to 80 percent.[8]
  • Market Basket Update:R. 2 replaces the market basket update in 2018 with a one percent update for long-term care hospitals (LTCHs), skilled nursing facilities (SNFs), inpatient rehabilitation facilities (IRFs), home health provides (HH), and hospice providers.[9]
  • Medicaid Disproportionate Share Hospitals (DSH): Currently, reductions in state DSH allotments are scheduled to begin in FY2017. This policy would delay Medicaid DSH changes until FY2018 and extend the policy through 2025.[10]
  • Levy on Medicare Providers for Nonpayment of Taxes: This provision permits the IRS to impose a levy of up to 100 percent on tax delinquent Medicare service providers.[11]
  • Adjustments to Inpatient Hospital Payment Rates: Under current law, hospitals will receive a 3.2 percentage point adjustment in addition to their base payment rate in FY18. This policy would phase-in this update incrementally and prohibit CMS from collecting a recoupment from 2010.[12]

This legislation also includes two bipartisan Medicare reform bills.  The first, H.R. 284, the Medicare DMEPOS Competitive Bidding Improvement Act (passed March 16, 2015 by voice vote), makes modifications to the Medicare durable medical equipment, prosthetics, orthotics, and supplies competitive acquisition program.  The other, H.R. 1021, the Protecting Integrity in Medicare Act, strengthens Medicare’s ability to fight fraud and builds upon program integrity policies.  H.R. 2 also delays CMS’ auditing enforcement of the “two-midnight” policy, which requires a patient stay two-midnights in a hospital to qualify for inpatient status, through September 30, 2015.[13]  H.R. 2 also reverses the CMS decision to eliminate the bundled payment for surgical services that span a 10 and 90-day period, and requires CMS to periodically collect information on the services that surgeons furnish during these global periods beginning not later than 2017 (and use that information to ensure that the bundled payment amounts are accurate).  Finally, H.R. 2 provides a two-year extension of the Secure Rural Schools and Community Self-Determination Act of 2000 through FY 2015.  This program allows for payments to mitigate the impacts on counties containing national forests with declining timber revenues.

A full section-by-section analysis of H.R. 2 can be found here.

[1] See Section-by-Section, at 2.
[2] See Id.
[3] Id. at 2-3.
[4] Id.
[5] Id. at 4.
[6] The Express Lane Eligibility Program (ELE) permits states to rely on findings from another program (like SNAP, TANF, Head Start, WIC, etc.) to gather information on factors like income and household size in order to facilitate enrollment in healthcare coverage.
[7] See Section-by-Section, at 5.
[8] Id. at 5.
[9] Id. at 5.
[10] Id. at 5.
[11] Id. at 5.
[12] Id. at 5.
[13] Id. at 6.


The Sustainable Growth Rate (SGR) is a formula that was enacted in the Balanced Budget Act of 1997 to control Medicare spending on physician services.  However, the SGR policy flaws have compelled Congress to override the formula-driven cuts for more than a decade.  In fact, since 2003, Congress has spent nearly $170 billion in short-term patches to avoid these unsustainable cuts.  The most recent patch will expire on March 31, 2015.  H.R. 2 repeals the SGR, averting a 21 percent SGR-induced cut scheduled for April 1, 2015.

The Children’s Health Insurance Program (CHIP) covers more than 8 million children and pregnant women in families that earn income above Medicaid eligibility levels.  CHIP prevents millions of children from being uninsured, while keeping them in private coverage models.  Although CHIP is authorized through 2019, no new funding is available after FY 2015.  H.R. 2 fully funds CHIP through FY 2017.


CBO estimates that enacting H.R. 2 would increase direct spending by a total of $141 billion over the 2015-2025 period.  In addition, CBO conducted three supplemental analyses:

  • “The first analysis compares the budgetary effects of the bill as a whole to those of a policy that would freeze Medicare’s payment rates for physicians’ services at current levels and would make none of the changes in H.R. 2. CBO estimates that enacting H.R. 2 would cost $0.9 billion less over the 2015–2025 period than freezing payment rates for physicians’ services.”
  • The second analysis examines the effects of the bill on deficits during the decade after 2025. However, considerable uncertainty exists in conducting this analysis.  In CBO’s assessment “compared with the costs of freezing Medicare’s payment rates for physicians’ services, the budgetary effects of the legislation could represent net savings or net costs in the second decade after enactment, but the center of the distribution of possible outcomes is small net savings.”
  • The third analysis examines the effects of the bill on monthly premiums for Medicare Part B in 2025. “CBO estimates that enacting H.R. 2 would raise basic monthly Part B premiums by about $10 in 2025. By comparison, CBO estimates that the basic monthly premium would increase by about $7.50 in 2025 if Medicare’s payment rates for physicians’ services were frozen at current levels.”

Additional Information

For questions or further information contact the GOP Conference at 5-5107.