Practice Economics

SGR replacement cost now up to $176 billion


The price tag to replace the Medicare Sustainable Growth Rate formula has grown to an estimated $176 billion over 10 years, up $40 billion from the most recent estimates, according to a Sept. 13 Congressional Budget Office analysis.

This time, the nonpartisan CBO analyzed the Medicare Patient Access and Quality Improvement Act of 2013 (H.R. 2810), which was approved unanimously by the House Energy and Commerce Committee in July. The bill has not seen any further movement since that time, but it is expected that Congress will take up SGR reform again this fall.

In its analysis, the CBO said that it thought that H.R. 2810, in part because it continues to rely largely on fee-for-service, would continue to drive up Medicare spending. Between 2014 and 2018, the bill proposes to increase physician fees by a flat 0.5%.

Starting in 2019, physicians will be paid based on performance in a program that gives rewards for quality, or on so-called alternative payment models.

The CBO said it believed that physicians would choose payment models that would increase their fees, which would, in turn, create a rise in Medicare spending. The pay increases for 2014-2018 will likely cost $64 billion, according to the agency. From 2019 to 2023, spending on physician fees is expected to hit $112 billion.

In addition, the agency said that Medicare would end up spending about $0.3 billion on other payment reforms proposed in the legislation, including modifying payment rates in certain California counties, adjusting relative value units for certain physicians’ services, and requiring the development of payment codes to encourage care coordination and the use of medical homes.

[email protected]

On Twitter @aliciaault

Next Article:

Sen. Cardin hears doctors’ concerns on ACA

Related Articles