AANEM News Express

AANEM News Express

SGR Repeal: A Real Possibility?

By Millie Birr, JD, MPP, health policy director
Could this be the year that a permanent fix to Medicare’s Sustainable Growth Rate (SGR) payment scheme finally passes? The current patch of the SGR is set to expire at the end of this month, which means that physicians would face a 21% Medicare rate cut if the SGR is not repealed or patched. Over the past couple of weeks, news broke that bipartisan legislation permanently repealing the SGR is in the works. House Speaker John Boehner (R-OH) and House Minority Leader Nancy Pelosi (D-CA) crafted the last-minute legislation, SGR Repeal and Medicare Provider Payment Modernization Act of 2015 (H.R. 1407). 
What’s in the Bill?
The bill would repeal the SGR, replacing it with a quality-based payment system, and implementing a modest Medicare raise (~0.5%) for physicians through 2019. The new payment system would combine three existing Medicare quality programs into one streamlined program. The legislation also includes an extension of funding for the Children’s Health Insurance Program (CHIP) for two more years. 
What’s the Cost?
The total price tag of this legislation is estimated at $220 billion—approximately $137 billion for the SGR repeal, $40 billion for two-year CHIP extension, and another $40 billion for Medicare pay raises and increased reimbursement for rural medicine and physical therapists extension. (CHIP is set to run out of funding by September 30 without this legislation.)
Overcoming the Challenge of Offsets
In the past, the biggest hurdle has been how to offset the cost. Now it appears that both parties may agree to forget about an offset for the SGR repeal, adding the cost to the federal deficit, and instead focus on offsetting the cost of CHIP and Medicare pay raises. It is rumored that those offsets may come in the form of reduced reimbursement for hospitals and increased cost-sharing for Medicare recipients who earn over $133,000 per year.
While die-hard conservatives are expected to oppose the bill, experts believe that House Democrats will give Boehner enough votes for passage in the House. Experts also think that if the bill passes in the House, it will also pass in the Senate—though the possibility of tack-on amendments remains, which killed the bill last year. Additionally, Senate Democrats have voiced concern that the CHIP extension is only for two years (they would like four) and that Medicare patients may be forced to pay more out-of-pocket.
Bottom Line
It appears that permanent repeal of the SGR is a real possibility. The bill is expected to reach the House floor on Wednesday or Thursday this week. Provided it passes, it will move to the Senate. There is concern that the bill won’t make it through the Senate before its April 1 deadline, in which case the 21% pay cut would go into effect. However, because there is a 14-day delay on all Medicare payments, the Senate could make the legislation retroactive in effect, avoiding any payment cuts.

UPDATE (3/26/15) Bill Passes Through House, Goes to Senate

The U.S. House Thursday voted overwhelmingly in favor of scrapping Medicare's sustainable growth-rate formula, passing a permanent doc fix. The measure next goes to the Senate for a vote. Read the Modern Helathcare article

AANEM policy staff continues to monitor these developments and will keep you updated as more information becomes available.

Call, email, or tweet your legislator about the SGR formula today! Visit www.fixmedicarenow.org/physicians to learn how. 

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