The AAFP urges Congressional legislators to repeal the Medicare Sustainable Growth Rate (SGR) formula by the end of this year, and replace it with a physician-payment system that supports family physicians who are transforming their practices toward value and away from volume. There is virtually unanimous agreement that the SGR threatens Medicare, and impedes meaningful reform of health-care delivery.
Earlier this year, the AAFP supported the bipartisan, bicameral SGR-replacement legislation approved by the House Energy and Commerce Committee and the House Ways and Means Committee (HR 4015), and the Senate Finance Committee (S 2000). We supported the measures because they would repeal the SGR and provide a path to payment reform that supports transformation to alternative payment models such as medical homes. The legislation failed to pass Congress and instead legisators resorted to another temporary extension of the SGR through March 31, 2015. The AAFP strongly urges Congress to abandon the flawed approach of stringing together temporary patches—which poorly serves Medicare patients and the providers who care for them.
Sustainable Growth Rate (SGR)
Seventeen times since 2003, Congress has had to override the SGR formula that is used to calculate annual updates for the Medicare physician payment rate. The cost to the taxpayer of these short-term patches is about $174 billion—more than the estimated cost of a permanent fix. The current extension will end on March 31, 2015, which would mean a reduction of about 21percent in the Medicare physician payment rate if Congress does not act. Moreover, because of the cumulative nature of the formula, additional decreases are projected annually for many years into the future. Short-term patches to the formula, when coupled with escalating costs associated with operating a medical practice, contribute to pressure on physician practices.
The Process Ahead
Congress has never been closer to solving the SGR problem once and for all. Congress has written the repeal-and-replace policy; now both House and Senate must pass the bill before the 113th Congress ends at the end of 2014. Congress must to summon the will to finish the job this year.