SGR Fix Update Two Year Freeze on Physician Payments

On Monday, February 14, 2011, President Obama submitted his Fiscal Year 2012 budget to Congress. The President’s budget proposes a $663 million increase in the CMS’ discretionary budget, which reflects money needed to implement the health care reform law enacted last year.

In addition, President Obama is proposing a two year SGR fix as part of his FY 2012 budget proposal. In essence, he is proposing a two year freeze of physician payments covering CY 2012 and CY 2013. His budget then assumes that Congress will find a permanent fix for the SGR problem beginning in 2014.

The short-term cost of freezing the Conversion Factor for two years is approximately $62 Billion. The President proposes to “pay for” this freeze by eliminating fraudulent or wasteful spending in the Medicare program, making various changes in the Medicaid program that would reduce federal outlays, impose a financial penalty on providers who do not update their Medicare enrollment information, and other activities aimed at reducing costs.

According to the President’s budget, the long-term cost of fixing the SGR problem is estimated at $315 Billion over 10 years. The President’s budget assumes that this will occur and that Congress will find the money to pay for this fix. However, no specific long-term proposals for how to fix the SGR problem are put forward by the Obama Administration nor is there any proposal for how to pay for the unspecified fix.

ADVOCATE will continue to provide updates on this matter as they arise.

With best regards,
Kirk Reinitz, CPA