CBO Analysis Renews Calls for SGR Repeal

A Congressional Budget Office (CBO) analysis released this week lops $107 billion from the cost of eliminating the Sustainable Growth Rate (SGR) funding formula, and that new estimate has resuscitated efforts by some in Congress to repeal the reviled but unenforced mandate.

The new projection explains that repealing the SGR would cost $138 billion over the next 10 years, significantly less than the $248 billion priced in previous estimates. The CBO attributed the lower cost to a decline in the rate of Medicare spending growth when compared with historic trends.

Most recently, SGR cuts of nearly 30% were scheduled to take effect on Jan. 1st to account for years of “kick the can” delays of smaller, incremental annual cuts. Congress on Jan. 1, 2013 stepped in to delay the cuts until Jan. 1, 2014.

On Wednesday, U.S. Reps. Allyson Schwartz (D-PA) and Joe Heck, DO (R-NV) filed the Medicare Physician Payment Innovation Act to repeal the SGR. “There is no single greater threat to the long-term solvency of Medicare and seniors access to healthcare than the broken Medicare payment system, or SGR”, said Schwartz.

Break Away from the Static

The bill would:

  • Permanently repeal the SGR formula.
  • Provide annual positive payment updates for all physicians for four years.
  • Ensure access to preventive care, care coordination, and primary care services through increased payment updates for those services.
  • Aggressively test and evaluate new payment and delivery models.
  • Identify payment models to provide options for providers across medical specialties, practice types, and geographic regions.
  • Stabilize payment rates for providers who demonstrate a commitment to quality and efficiency within a fee-for-service model.

Even with the lowered cost projections, finding $138 billion in the midst of ongoing budget battles would be no small feat and would eventually need to be part of a more comprehensive reform bill. However, the CBO score is a big catalyst that didn’t exist ever before.

ADVOCATE will continue to provide updates as it becomes available.

Best regards,
Kirk Reinitz, CPA