SGR’s days may be numbered

Republicans and Democrats don’t agree on much, but it appears they both agree that a repeal of the sustainable growth rate (SGR) formula is likely. Rep. Paul Ryan (R-WI) and Sen. Patty Murray (D-WA) have both drawn up budget plans for 2014 that include plans to pay for an SGR repeal. Implemented as part of the Balanced Budget Act of 1997, the SGR is a mechanism to ensure that increases in Medicare expenses do not exceed the gross domestic product growth rate. Each year, the Medicare Payment Advisory Commission issues a report on the previous year’s expenses and recommends an adjustment to the physician pay rate. The recommendation is typically a reduction in physician payments, to which Congress responds with a “doc fix” which suspends the SGR from going into effect for the upcoming year and raises the recommendation for next year. However, the belief that the SGR will be repealed is where the similarities end when it comes to the two budget plans. Murray’s plan maintains current Medicare rates for 10 years and rolls back the sequester’s 2% reduction of Medicare rates. The money saved from the frozen Medicare payments would be used to offset the cost of eliminating the SGR. Ryan’s plan assumes the sequestration cuts will occur, but sets aside a “deficit-neutral reserve fund” that could be used to pay for the cost of eliminating the SGR. Neither plan would actually repeal the SGR. The budget plans are seen as roadmaps for government spending, therefore a separate act that repeals the SGR would need to pass. But the fact that both the GOP and the democrats are planning for the SGR’s demise is a good sign they may have kicked that can for the last time. Not to worry. There are many other cans to be kicked.