Senate Repeals SGR Just Before the Deadline

With just hours to go before an automatic 21% cut in Medicare fees was scheduled to take effect, the Senate passed legislation to repeal the much-reviled sustainable growth rate (SGR) formula.

The House passed the legislation at the end of March, but the Senate chose not to vote before adjourning for a 2-week recess. The Senate’s final vote to pass the legislation and repeal the SGR formula was 92-8.

“Stick a fork in it, it’s finally done," House Energy and Commerce Committee Chairman Fred Upton, R-Michigan, said simply in a statement.

The bill was drafted through negotiations between Speaker John A. Boehner and Rep Nancy Pelosi, and in addition to making sweeping changes to the way Medicare pays physicians, the bill also extends the Children’s Health Insurance Program (CHIP) for another 2 years.

“This is a significant and hard won achievement that will ensure better quality healthcare and certainty for millions of seniors and children,” Senate Finance Committee Ranking Member Ron Wyden, D-Oregon, said in a statement.

The legislation repeals the SGR and provides stability and 5 years of payment updates for physicians and providers while focusing payments on the quality, value, and accountability of care provider rather than simply the number of procedures. It also ensures a 5-year period of annual updates of 0.5% to transition to the new system.

“By its actions today, the Senate—in one fell swoop—abolished Medicare’s broken Sustainable Growth Rate payment formula and replaced it with a better and permanent system for paying physicians and providers,” Sen Wyden said.

The bill is now going to President Barack Obama’s desk. The president has already indicated that he plans to sign the bill into law. Various physician organizations have been applauding the vote by the Senate to repeal the SGR formula.

“Today we have achieved an important victory for our Medicare and TRICARE patients,” Robert M. Wah, MD, president of the American Medical Association, said in a statement. “By uniting our voices on Capitol Hill, we got Congress to pass the bipartisan Medicare Access and CHIP Reauthorization Act—which at last repeals the so-called "sustainable" growth rate payment formula that perennially threatened patients' access to care.”

David A. Fleming, MD, MA, MACP, President of the American College of Physicians, highlighted the importance the new legislation has on incentivizing physicians to engage in activities that promote quality and providing support to physicians who participate in alternative payment models, such as patient-centered medical homes.

"Physicians and their patients no longer will have to be concerned with impending yearly payment cuts as a result of the flawed SGR formula and no longer will this burden of uncertainty be hanging over physician practices," he said in a statement.