SGR stands for sustainable growth rate and was enacted as part of the Balanced Budget Act of 1997 as a way to limit growth in provider payments and contain program costs. The SGR is a complex formula tied to United States economic factors. Each year, for at least the last 10 years, the SGR resulted in potential cuts to physician fees. Due to extensive grass-roots efforts, congress has postponed the cuts 16 times. These cuts do not dissolve once they are postponed; they are cumulative and need to be addressed again each fiscal year or more often.
This year at the 11th hour, congress postponed the SGR cut until March 31st. If nothing is done, physician fees will be cut across the board by 24% on April 1st. The only permanent way of eliminating the flawed SGR formula is to change it or repeal it via Medicare law.
For the first time, there is a bill in Congress addressing the flawed fundamental SGR formula. The “SGR Repeal and Medicare Provider Payment Modernization Act of 2014” (H.R. 4015/S 2000) is currently being hotly discussed in Congress. It appears that there is bipartisan and bicameral agreement that the SGR formula is flawed and needs to be fixed. The disagreement is in the area of how to pay for the change. The bill proposes .5% increase in physician fees over the next 5 years, but in Medicare all increases must be budget neutral, so cuts must be made elsewhere in the system. Where or how these cuts are made is the focus of debate on both sides of the aisle.
It is likely that the SGR issue will be postponed again at the end of March, in order to give congress more time to work out the “pay for” issue. The good news is that the flawed SGR formula is finally being addressed.
APAPO (March 2014). Briefing Materials for Hill Visits.
WPA Advocacy Cabinet
(Post Author: Dori Ann Bischmann, PhD, Wisconsin Federal Advocacy Coordinator for APA/WPA; WPA Medicare Liaison)