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SGR Update

On Thursday, December 12, the Senate Finance Committee and House Ways and Means Committee each approved their respective versions of legislation to repeal and replace the SGR formula. While many of the substantive provisions of the respective bills were the same, there were some significant differences in the two bills.

Current law projects cuts in the Medicare provider payments of approximately $116 billion over the next 10 years based upon the existing SGR formula. Therefore, repealing the SGR formula would add approximately $116 billion in additional outlays from the Medicare Trust Fund over the next 10 years.

Neither the House nor Senate Committees disclosed how they intend to pay for this SGR fix legislation. Some combination of Medicare cuts elsewhere in the program or revenue increases will need to be adopted in conjunction with the “fix” in order to account for the additional spending.

Because it will take time to negotiate a final fix, the House and Senate have both approved legislation adopting a three-month SGR patch. This patch will prevent the SGR-related cut in provider payments from occurring on January 1, 2014 and it would also provide a 0.5% increase in the Conversion Factor. The President has said he will sign this legislation.

Precision is pleased to share the news that a permanent solution to the SGR problem appears to be forthcoming.