SGR Fix

government_400In December, Congress passed a sort term fix to the Sustainable Growth Rate (SGR) that is set to expire on March 31st. The short term fix was passed in order to give Congress additional time in finding a permanent fix to the SGR and to ultimately avoid a 24 percent reduction to the Medicare Physician Fee Schedule (MFPS). The short term fix also provided a .5 percent increase to the MFPS which took effect on on January 1st and was the first increase in 4 years.

Congressional leaders are currently in the process of consolidating three bills to repeal and replace the current Medicare SGR. The House Energy and Commerce, House Ways and Means, and the Senate Finance are the committees that have jurisdiction over the SGR reform. The committees have approved bills to repeal and replace the SGR but must reconcile the bills differences before moving forward.

Though there is a bi-partisan consensus that the SGR should be repealed, and also an emerging consensus on what type of system should replace the SGR, the question of how to pay for the “fix”, remains unanswered. Finding offsets is proving to be the real challenge for lawmakers. Committee staff is currently working through lists containing many options for potential offsets, but currently none have been endorsed.

The Congressional Budge Office (CBO) weighed in on just how much the SGR initiatives will cost. The House Ways and Means Committee approved bill is estimated to cost $121.1 billion over 10 years. The Senate Finance Committee bill is estimated to cost $150.4 billion over 10 years. The cost of each bill is less that originally anticipated. “Extenders” to the Finance bill is the reason for it being higher than the Ways and Means bill that didn’t include any “extenders”. The Extenders being:

  • Repeal the therapy cap after 2014 and replace it with a new medical review program.
  • Permanently codify (with modification) the work GPCI floor.
  • Extend ambulance add-ons for five years. New data collection requirements with 5% penalty for failure to provide data.
  • Permanently extend but modify the Medicare-dependent hospital (MDH) and low –volume hospital programs.

Confidence is low that a permanent fix can be accomplished by March 31st deadline. Another short term fix to allow for additional time past the March 31st deadline is a strong possibility.