HomeWashington Letter2014 ▶ SGR Repeal: Good News/Bad News
SGR Repeal: Good News/Bad News

March 2014

As the April 1st cut to Medicare physician reimbursement looms, legislation to repeal the Medicare Sustainable Growth formula (SGR) is expected to get significant attention in Congress for the remainder of March. The good news is that the policy part of repealing SGR has been resolved. There is now bipartisan agreement in both the House and Senate on how to repeal and replace SGR. The bipartisan bill would:

  • Repeal the SGR and end the annual threat to seniors' care, while instituting a 0.5 percent payment update for five years.
  • Improve the fee-for-service system by streamlining Medicare's existing web of quality programs into one value-based performance program. It increases payment accuracy and encourages physicians to adopt proven practices.
  • Incentivize movement to alternative payment models to encourage doctors and providers to focus more on coordination and prevention to improve quality and reduce costs.

The bad news is that, after having done all the hard work of reaching a bipartisan policy compromise, Congress has fallen back into its partisan ways and the House Republican leadership has decided to pay for the $130 billion over 10-years price tag associated with the SGR repeal bill by delaying the Affordable Care Act individual mandate by 5 years. The bill passed the House of Representatives on Friday. This is the 51st time the House of Representatives has passed legislation to repeal or delay the Affordable Care Act. Any bill that delays the individual mandate is a non-starter in the Democrat-controlled Senate.

The Senate is taking its own interesting path and has combined the SGR bill with an extension of other popular Medicare provisions and is asking the Senate to vote on the bill with no mention of how to cover the $130 billion price tag. Passing an expensive bill with no offset will be a difficult vote for many Senators, especially Senate Republicans. Getting the bill through the Senate will be the most challenging step in the process.

The hope is that both chambers will pass their flawed versions of the bill and then address realistic ways to pay for the bill during House/Senate conference negotiations. If the process breaks down, physicians are looking at a 24 percent cut starting on April 1, and Congress will once again begin scrambling to pass a temporary SGR patch.

The ATS will continue to urge Congress to act responsibility to pass legislation that permanently fixes SGR.

Last Reviewed: October 2017