July 25, 2014

New Score, New Hope for Sustainable Growth Rate (SGR) Fix? Congressional Budget Office (CBO) Releases Budget and Economic Outlook

Yesterday, the Congressional Budget Office (CBO) released its Budget and Economic Outlook for fiscal years 2013 through 2023 (a copy is available here).  Included in the report was a reference to Medicare payments for physician services – the so-called “doc fix” that has plagued the health policy world since 2002.  (For additional information on the SGR, see DBR’s dewonkify and DBR blog posting on CBO’s August 2012 SGR score.)

In the report, CBO now estimates that a 10-year freeze to physician payments would cost $138 billion – significantly lower than the $243.7 billion CBO estimate released on November 1, 2012 (available here).  Why the change?  As explained in footnote 21 on page 31, CBO now estimates lower spending on physician services.  The amount of the SGR cut depends on the difference between actual spending and targeted spending (if actual spending is higher than targeted spending, it results in a cut to physician payments).  However, CBO now estimates that actual spending will be less than the spending targets, which means that physicians could see an increase in reimbursement beginning in 2015.

All of this is good news for those that wish to repeal and replace the SGR.  Today, Representatives Allyson Schwartz (D-PA) and Joe Heck (R-NV) introduced The Medicare Physician Payment Innovation Act, legislation that would permanently address the SGR issue.  Similar to legislation they introduced in the 112th Congress, this bill would permanently repeal the SGR.  All physician payments would be frozen until 2014.  Between 2015 and 2018 primary care services would receive a 2.5 percent increase in reimbursement, while all other physician services would receive a 0.5 percent increase.  Centers for Medicare & Medicaid Services (CMS) would test and evaluate new payment models and by October 1, 2017, would issue a menu of options available to providers.

©2014 Drinker Biddle & Reath LLP. All Rights Reserved

About the Author

Medicare Reimbursement and Health Policy Director

Anna Schwamlein Howard is the Medicare Reimbursement & Health Policy Director in the firm’s Health Government Relations team.

A nationally recognized authority on health care reform issues, Anna has considerable experience in government relations and regulatory affairs. Specifically, she has extensive knowledge with the Medicare Modernization Act, medical privacy and prescription drug issues, Medicare physician payment legislation, the Affordable Care Act, and other federal health issues impacting the lives of older Americans.

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