The sustainable growth rate (SGR) was implemented by Congress in1998. The SGR’s aim was to slowly bring down or at least decellerate Medicare compensation for physicians compensation. However, each year, it gets reversed by Congress. Now, instead of a gradual decline, the implementation of SGR would result in about at 25%pay cut for Medicare docs.
I have written many previous posts about how at the end of each year, Congress passes a temporary law which reverses the SGR for a single year. Fixing the SGR for a single year kicks the can down the road, but for lawmakers, they don’t have to deal with the budgetary implications on a bill’s CBO scorecard.
However, the annual write of passage of temporary fixes may be over. The New York Times reports:
The House overwhelmingly approved sweeping changes to the Medicare system on Thursday, in the most significant bipartisan policy legislation to pass through that chamber since the Republicans regained a majority in 2011.
The measure, which would establish a new formula for paying doctors and end a problem that has bedeviled the nation’s health care system for more than a decade, has already been blessed by President Obama, and awaits a vote in the Senate. The bill would also increase premiums for some higher income beneficiaries and extend a popular health insurance program for children.
The legislation, which passed on a 392-to-37 vote, embodies a rare and significant agreement negotiated by Speaker John A. Boehner and the House Democratic leader, Representative Nancy Pelosi of California, two leaders who are so often at odds with each other.
This bill still needs to pass the Senate, but this is good news for sensible budgeting. There has been some criticism that SGR will bust the federal budget, but the issue was that the decreases in physician compensation would never have really come to pass. Thus, a permanent doc fix will simply make the cost of Medicare more transparent, rather than increasing federal outlays.