Proposed Bill to Permanently Repeal SGR Formula & The Threat To Medicare Physician Payments

May 16, 2012

On May 9, 2012, a bipartisan bill was introduced to the U.S. House of Representatives that would permanently repeal the Sustainable Growth Rate (SGR) formula. The SGR formula was adopted by Congress in 1997 with the intention of preventing Medicare spending on physicians from exceeding the overall growth of the economy. Every year by March 1, the SGR is calculated and presented to the Medicare Payment Advisory Commission (MedPAC) for evaluation of cuts that need to be made to the Medicare Physician Fee Schedule. In turn, every year physicians push back against Congress, demanding that the drastic cuts be postponed. This back-and-forth proposal and push back escalated this year to the drastic threat of a 27% reduction in physician reimbursements. Fortunately, the “doc fix” went into effect in the eleventh hour, relieving physicians of this reduction – at least for this year. However, unless further legislation passes between now and then, the proposed reimbursement cut for January 1, 2013 looms above 30%.

The May 9th “Medicare Physician Payment Innovation Act,” proposed by U.S. Reps. Allyson Schwartz (D-PA) and Joe Heck, D.O. (R-NV), would permanently repeal the SGR formula and end the annual battle against drastic cuts. In lieu of the SGR formula, the bill proposes alternate reimbursement models that provide more predictable updates to the yearly reimbursement schedule.

The proposed bipartisan bill has garnered support from leaders in the medical community, including David L. Bronson, MD, FACP, President of the American College of Physicians: “We enthusiastically support this legislation. It not only addresses the continued threat of the SGR formula, it also addresses moving us beyond the fee-for-service payment model toward new models that better align payment with value.”

The full press release from the office of U.S. Representative Allyson Y. Schwartz can be viewed here.