SGR Patch in 2014 Likely

Congress is likely to pass another short term doc-fix for CY2014.

If Congress fails to reach an agreement on the Sustainable Growth Rate (SGR) by Dec. 31, 2013, the current short-term SGR-fix will expire and cause physician payments to decrease by 24.4 percent. While the House is likely to introduce a bill later this year, a SGR repeal and replace compromise is very unlikely in 2013 due to lack of consensus on a repeal approach as well the cost of reforming the system. 

While most physicians support a new payment system that values quality and coordination of care, some physician groups continue to urge Congress to take their time in developing the new quality measures that are meaningful to individual specialties. Although physicians experience the most direct impact of SGR changes, life sciences companies also track the effect of the SGR on physician services related to their drugs and devices. Hospitals and post-acute care (PAC) providers generally support changing the SGR system because of the pressure it puts on their physicians, but strongly oppose paying for short-term SGR fixes by cutting facility provider rates.

Here is a recap of SGR activity this year to date:

  • The Congressional Budget Office (CBO) released revised estimates reducing the 10-year cost of SGR repeal from $245 billion to $139 billion.
  • House Energy and Commerce (E&C) Republicans released draft legislation to repeal and replace the current SGR formula with a new FFS system emphasizing quality measures House Republicans are requesting additional comments from the provider community before moving forward.
  • The Senate Finance Committee held their first hearing on SGR in six years, and is also seeking suggestions from the provider community.
  • After the CBO’s recent SGR-repeal revisions, the Medicare Payment Advisory Committee (MedPAC) now recommends a 10-year pay freeze for primary care physicians and a 3 percent or less payment cut to specialists for each of the first three years, and a pay freeze for specialists until Congress implements a new payment system. Prior to CBO’s recent estimates, MedPAC supported reducing specialist pay by 5.9 percent for each of the first three years.

Avalere is working with stakeholders to analyze a range of policy proposals in preparation for more significant reform opportunities in 2014 and beyond. For more information, contact Fauzea Hussain.