Every year since 2002, Congress has postponed the Medicare physician payment cuts that would be triggered by the sustainable growth rate (SGR) formula. But there is optimism that 2014 may finally be the year when the SGR is repealed and replaced by a more reasonable formula to determine Medicare payments to physicians.
The most recent postponement occurred in December when the House and Senate voted to extend a temporary SGR fix until March 31, thus avoiding a 24 percent reimbursement cut set to take effect, according to a Kaiser Health News report.
It was also in December when members of the House Ways and Means and the Senate Finance committees had near unanimous votes on bills to end SGR, earning the praise of the American Medical Association. Earlier in the year, the House Energy and Commerce Committee unanimously passed similar legislation.
What remains unclear is what formula would replace SGR. The House Ways and Means, House Energy and Commerce and Senate Finance committees have passed different bills that would repeal SGR and replace it with a formula that pays physicians based upon quality of care rather than quantity of services provided. Lawmakers are working to address the differences between the bills, as discussed in a Modern Healthcare report.
What also remains unclear is how increases in physician payments as a result of a new formula would be funded. The Congressional Budget Office estimated that the House Ways and Means Committee’s bill would cost about $121 billion over 10 years. While the estimated cost of a permanent fix has substantially declined since last year, it is still an expense lawmakers must address in any final bill.