114th Congress Sets Sights on SGR Patch

With a March 31 deadline looming for the 114th Congress to either patch or repeal the sustainable growth rate (SGR) formula, the Health Subcommittee of the US House of Representatives’ Energy and Commerce Committee will hold a hearing to discuss the future of the fundamentally flawed formula used to set Medicare physician payments. That hearing is tentatively scheduled for January 21 and 22.

The 113th Congress could not agree and again failed to pass bipartisan, bicameral legislation (HR 4014/S2000) that would have repealed the SGR, replacing it with a payment system that was more stable, fair, and had the support of many notable physician groups, including the American Society of Clinical Oncologists (ASCO) and the American Medical Association (AMA).

The current Congress has been quick to make SGR reform a priority yet again. The SGR patch — also known as the “doc fix” — would replace the SGR methodology that calculates physician payment under Medicare. Without reform or a patch, physicians could face a 20% cut in payment.

The outcome of the hearings may differ slightly this year because of recent retirements—notably Senator Max Baucus (D-MT) and Representative Dave Camp (R-MI). It is not clear, however, if Congressional leaders plan to renegotiate the deal reached last year, or whether the Committee is going through regular order. Regardless, Congress must still determine how to pay for the doc fix. Originally, the doc fix was thought to cost approximately $180 billion over 10 years, according to the Congressional Budget Office (CBO).

Many health policy experts believe that any attempt to permanently replace the SGR will include a pathway that transitions most providers into alternative payment models such as medical homes or accountable care organizations. Further, stakeholders are closely watching how new committee GOP Chairmen Paul Ryan (WI) and Orin Hatch (UT) over the Ways and Means and Senate Finance Committees, respectively, may change previous bipartisan proposals from last year.