Permanent SGR Fix Legislation Introduced

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Sometimes legislators know a good deal when they see one, so when the latest Congressional Budget Office (CBO) report on Medicare spending growth, released Tuesday, dropped the price tag on a permanent sustainable growth rate (SGR) fix by $100 billion, they jumped on this discount "doc fix" opportunity.

Representatives Allyson Schwartz (D-Pa.) and Joe Heck (R-Nev.), a physician, introduced bi-partisan legislation on Wednesday to permanently repeal the SGR formula that would slash Medicare physician payments by nearly a third if it ever became effective. The bill is H.R. 574 and so far has eight co-sponsors.

Legislators have consistently said they want the formula permanently repealed, but the price of doing so was always too high. Instead Congress would pass cheaper temporary fixes — typically at the very last minute.

In addition to the new legislation, two key GOP-led committees announced they are working on a framework for a permanent SGR-repeal. They are the powerful House Energy and Commerce Committee and the Ways and Means Committee.

The fact that the SGR issue is being taken up early in the year signals that legislators are eager to act now that CBO estimates the total cost of a repeal is less because Medicare spending growth is slowing. Net outlays for Medicare grew by just 3 percent in fiscal year 2012, the slowest rate since 2000, according to the CBO’s report. For the 2013 fiscal year, CBO estimates that Medicare costs will increase by 4 percent and Medicaid by 6 percent.

With Medicare spending growth slowing, CBO now estimates that a permanent SGR repeal will cost $138 billion and not $245 billion, as it had previously predicted.

"I think the new CBO number bodes well for passing the legislation," said Representative Heck in a Politico Pro report. “It's a much smaller hill to overcome.”

An Energy and Commerce aide told The Hill that the Energy and Commerce Health Subcommittee’s very first hearing of the year will focus on the SGR repeal. In addition, staff from both committees are reportedly meeting with stakeholders today to flesh out what a permanent SGR repeal will look like and what will replace the flawed formula in controlling the cost of Medicare.

Currently, the plan calls for three phases. In the first phase, Congress will set stable physician payment rates. Then, Congress would establish a new payment system focused on rewarding quality of care. Finally, in the third phase, the way Medicare compensates physicians would be refined to also reward doctors who provide cost-efficient care.