Senate Joins House in SGR Repeal

The Senate has joined the House of Representatives in passing legislation to repeal the Sustainable Growth Rate (SGR) formula and replace it with the Medicare Access and CHIP Reauthorization Act of 2015 (HR 2).

The Senate voted 92 to 8 in favor of passing the new bill hours before a deadline that would have resulted in substantial Medicare reimbursement cuts. The House of Representatives passed the bill in a 392 to 37 vote on March 26, 2015. President Barack Obama has indicated that he will sign the bill into law.

"Today's courageous vote by the US Senate to finally end the Sustainable Growth Rate formula is a vote for the millions of patients with cancer who depend on Medicare to help them fight their disease,” ASCO President Peter P. Yu, MD, said in a statement. “With Congress passing this historic legislation to finally end the 13-year SGR roller coaster ride, Medicare beneficiaries and their physicians can breathe easier knowing that they will no longer face the perennial threat of payment cuts that risk disruption of care and cause anxiety among patients.”

HR 2 will permanently repeal the SGR and incorporate $200 billion in spending, along with a raise in physician pay of 0.5% in the latter half of this year and then each year through 2019. In the past 12 years, patches to SGR have cost nearly $170 billion, with the most recent fix expiring on March 31.

Despite the expiration of the patch, the Centers for Medicare & Medicaid Services was capable of holding claims until April 14, at which point a 21% reimbursement cut would automatically take affect.

“This is a significant and hard won achievement that will ensure better quality healthcare and certainty for millions of seniors and children,” Senate Finance Committee Ranking Member Ron Wyden (D-Ore), said in a statement. “By its actions today, the Senate — in one fell swoop – abolished Medicare’s broken Sustainable Growth Rate payment formula and replaced it with a better and permanent system for paying physicians and providers.”

SGR, which was passed in 1997, was originally designed to prevent the pace of Medicare spending from exceeding growth in gross domestic product. The formula placed a cap on reimbursement for physician services, with penalties in subsequent years to make back any additional funds spent. However, the bill quickly became burdensome and failed to control costs, with the first patches enacted in 2003.

Congress has passed 17 consecutive short-term fixes dating back more than a decade to moderate payment swings. Legislators supporting the bill said the annual “doc fix” patches have created uncertainty for millions of Medicare providers and beneficiaries.

“The American Society of Clinical Oncology looks forward to working with policymakers to ensure that this new law is effectively implemented and paves the way to new payment models that foster high-quality, value-based healthcare for all Americans with cancer,” Yu said.

In addition to payment fixes, HR 2 extended the Children’s Health Insurance Program (CHIP) by an additional 2 years. Other Medicare extender programs were also renewed or extended for 2 to 3 years, including the cap exceptions process.

Added funding under the new bill was partially offset through Medicare reform, which includes adjustments to Medicare Parts B and D, market basket reductions, and changes to inpatient hospital payment rates.

"Physicians across the country join the American Medical Association (AMA) in celebrating the US Senate's vote tonight to pass Medicare delivery and payment reforms that will help our nation's seniors and improve the health of the nation,” CEO and executive vice president of AMA, James L. Madara, MD, said in a statement. "Passage of this historic legislation finally brings an end to an era of uncertainty for Medicare beneficiaries and their physicians—facilitating the implementation of innovative care models that will improve care quality and lower costs. Patients will be able to get the care they need and deserve.”