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FACT FILE: SGR / 'the doc fix’

April 15, 2015
by Julie Miller, Editor in Chief
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For years, lawmakers have repeatedly patched over a long-standing piece of legislation that was originally created to protect Medicare from going bankrupt. Essentially, the Medicare program was obligated to cut the rates it paid to physicians under circumstances prescribed by the sustainable growth rate (SGR) formula. As one might imagine, a pay cut doesn’t sit well with providers. As a result, Congress has delayed the required cut 17 times, and each year, the amount of the cut has grown.

As of April 1, 2015, the accumulated cut had reached 21.2 percent. Since 2003, Congress has spent nearly $170 billion on the “doc-fix” patches.

Members from both sides of the aisle have long bemoaned the ineffectiveness of the SGR but have repeatedly failed to replace it with any permanent measures. The patches were often crafted in the final hours before or just after the legislative deadline.

 

What Happened: Congress at last repealed the SGR component of the Medicare payment formula on April 14, with a Senate vote of 92 to 8. The House approved the legislation weeks ago with 392 votes, and President Obama has indicated he will sign it.

What the Bill Does: H.R. 2 would freeze payment rates at current levels for three months and then increase them by 0.5 percent for services furnished during the last six months of calendar year 2015. Over the next several years, the bill would replace the SGR formula with new payment systems. The bill outlines major specifications of the new payment systems, including merit-based payment.

Pay Increases: Medicare physicians will automatically see 0.5 percent increases through 2019. Then from 2019 to 2024, physicians can gain a 5 percent incentive payment based on their participation in some of the newly designed payment models that are meant to reward quality over quantity.

Is It Any Good? American Psychiatric Assn. President Paul Summergrad, MD, said in a statement that APA supports the legislation:  “Senate passage of the SGR reform bill is a major step toward a reliable and rational payment system for Medicare beneficiaries and their physicians. It is long overdue. APA, our members, and the entire medical community advocated strongly for this legislation, which will eliminate uncertainty from the Medicare system to make sure patients and families can get the care they need and deserve from their physicians.”

The Bill is Bipartisan. The day before the Senate vote,  Finance Committee Chairman Orrin Hatch (R-Utah) praised the bill and told President Obama SGR has been a problem since its inception. “This is a good bill. And, it’s coming at the right time.” Also, Sen. Ron Wyden (D-Ore.) called the bill's passage "a milestone” that will get rid of “the outdated, inefficiency-rewarding, Medicare reimbursement system."

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