House Acts to Avoid Imminent Physician Payment Cuts
Press Release
The House of Representatives today acted to avert imminent cuts to physician payments under Medicare by passing a repeal of the outdated Sustainable Growth Rate (SGR) formula. The SGR Repeal and Medicare Provider Payment Modernization Act of 2014 replaces the old formula with a new system to incentivize the highest quality of care for seniors, preventing harmful cuts which threaten access to care. The legislation fully offsets the $138 billion cost of the new formula through 2024 by suspending the individual insurance mandate under Obamacare for five years.
"This bill accomplishes two things. It gives us a permanent "doc fix" so our physicians receive the appropriate compensation for their service under Medicare, and it delays the harmful effects of Obamacare for five years," said Cramer.
The SGR was enacted in 1997 to control the costs of physician services within Medicare. The physician reimbursement formula is drawn from several variables, but mainly pays through a fee-for-service system based on the number and types of services provided.
In 2002, reimbursement spending exceeded the total target level set by the SGR, triggering an across-the-board reduction in physician payments of nearly 5%. Since 2003, Congress has enacted 17 short-term ""doc fixes" to prevent such rate cuts, with the most recent iteration effective through March 31. If no action is taken on the SGR by this date, payments stand to be cut by approximately 24%.
The legislation passed by the House today repeals the SGR in its entirety, replacing the formula with small annual increases. The first five years provide for a 0.5% annual increase beyond the current rate, followed by a five year freeze. During the payment freeze, the adoption of a value-based model will be incentivized through more robust updates. The new model rewards physicians for maintaining a standard of quality care.
Organizations supporting the SGR Repeal and Medicare Provider Payment Modernization Act of 2014 include the American Medical Association, the National Association of Nurse Practitioners, the American Academy of Family Physicians, the American College of Surgeons and the Leukemia and Lymphoma Society.
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