Dollars and, at long last, sense: Congress repeals SGR

On Tuesday, the U.S. Senate voted to repeal the Medicare sustainable growth rate (SGR) formula, an action the AOA and the osteopathic profession have been advocating for throughout more than a decade.

The repeal is part of the Medicare Access and CHIP Reauthorization Act of 2015, which the U.S. House of Representatives also approved.

The Centers for Medicare and Medicaid Services began using the SGR to calculate payments to physicians for providing services to Medicare patients in 1998. Since then, Congress has repeatedly passed last-minute legislation to prevent the SGR formula’s steep cuts to physician payments. In 2014, a Congressional patch saved physicians from a 24.4% payment cut—but only temporarily. On April 1, the latest patch expired, cutting physician Medicare payment by 21%.

The new legislation fully repeals the SGR formula. Physicians no longer have to worry about such drastic looming cuts. In place of the SGR formula, they will see a 0.5% payment increase in the second half of 2015 and 0.5% raises every year following through 2019. In addition, the bill will create a new Medicare payment system based on quality of care rather than volume. The new system will encourage physicians to use alternative payment models such as the patient-centered medical home.

DOs react to repeal

“I am overjoyed,” says AOA trustee and seasoned advocate Richard Thacker, DO. “My colleagues and I have put so much time and effort into advocating for this change. I’m extremely happy to see SGR repeal finally come through as it needed to years ago. It’s an incredible achievement, and my colleagues at the AOA and the Florida Osteopathic Medical Association worked incredibly hard to help make it happen.”

An internist with a hospital-managed group in Tallahassee, Florida, Dr. Thacker notes that hospitals and practices have constantly struggled to plan for the future because they were uncertain what their Medicare payments would be.

“We’re making long-term investments in our practices,” he says. “We’re not making improvements to last for a few weeks, we’re making improvements to last for years. So we need to be able to look forward over a period of several years and know what to expect in order to invest income in our employees and in our facilities.”