US Senate, House Leaders Introduce a New SGR Replacement Bill

March 19, 2015—Leaders in the US Senate and US House of Representatives announced the introduction of a bipartisan, bicameral legislation to replace the “broken” Medicare Sustainable Growth Rate (SGR) formula with a payment system that they say rewards quality, efficiency, and innovation. 

According to the Senate and House press release, the SGR formula—the mechanism that ties physician payment updates to the relationship between overall fee schedule spending and growth in gross domestic product—is fundamentally broken. The flawed formula has led to 17 short-term patches enacted by Congress to prevent significant Medicare reimbursement rate cuts over the past decade. This bipartisan policy agreement is an important milestone in moving toward resolving the flawed SGR formula, providing certainty for seniors and their physicians and creating a system that promotes the highest quality of care.

As outlined in the press release issued by the bill’s sponsor, this proposal will:

• Repeal the SGR and end the annual threat to seniors’ care while instituting a 0.5% payment update each year for 5 years.
• Improve the fee-for-service system by streamlining Medicare’s existing web of quality programs into one value-based performance program. It increases payment accuracy and encourages physicians to adopt proven practices.
• Incentivize the use of alternative payment models to encourage doctors and providers to focus more on coordination and prevention to improve quality and reduce costs.
• Make Medicare more transparent by giving patients more access to information and supplying doctors with data they can use to improve care.

In addition to ending the cycle of annual “doc fix” crises that have created uncertainty for Medicare providers and beneficiaries for more than a decade, the bill seeks to create a system that promotes higher-quality care for America’s seniors. The legislators continue to work toward an agreement to put this plan into place as well as make reforms to strengthen Medicare and extend vital health provisions and the Children’s Health Insurance Program.

The legislation, which the press release noted is nearly identical to bills introduced in the House and Senate last year, was introduced by Rep. Michael C. Burgess, MD (R-TX), Senate Finance Committee Chairman Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Fred Upton (R-MI), House Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ), House Energy and Commerce Health Subcommittee Chairman Joe Pitts (R-PA), House Energy and Commerce Health Subcommittee Ranking Member Gene Green (D-TX), House Ways and Means Committee Chairman Paul Ryan (R-WI), House Ways and Means Committee Ranking Member Sander Levin (D-MI), House Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX), House Ways and Means Health Subcommittee Ranking Member Jim McDermott (D-WA), and Rep. Charles Boustany, MD (R-LA).

In a separate press release from his office, Congressman Dr. Burgess, who practiced as an obstetrician, commented, “As a doctor, I know firsthand just how destructive the SGR formula has been to America’s seniors and their providers. Finally, after unparalleled progress in recent years, both sides of the aisle have begun to understand that the long-term solvency of our Medicare system depends on taking this fight head-on together. Permanently repealing the SGR puts medical experts back in charge of measuring quality care, stamps out unnecessary barriers between seniors and their doctors, and begins to address the single largest driver of our debt. This is a clear opportunity to do what is right for the American people and a paramount first step toward accomplishing real, meaningful entitlement reforms."

The American College of Cardiology President Kim Allan Williams Sr, MD, issued a statement in response to the introduction of the legislation. Dr. Williams said, “Today, legislation was introduced in the House and Senate which would permanently repeal the SGR. This bicameral, bipartisan legislation, which mirrors the SGR repeal proposal the ACC supported in the previous Congress, would increase stability in the healthcare system for Medicare patients and the clinicians who care for them, and put in place real reforms that will put our nation’s healthcare system on a pathway to improved quality and value. The American College of Cardiology, along with over 750 medical societies, is urging Congress to correct this ongoing threat. We commend the leadership of both parties for this initial step, and strongly urge all of Congress to continue the unprecedented momentum toward solving this problem once and for all.”