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Senate, House Leaders Introduce SGR Replacement Bill

Mar 19, 2015

WASHINGTON — Today, leaders in the Senate and House introduced bipartisan, bicameral legislation to replace the broken Medicare Sustainable Growth Rate (SGR) formula with an improved payment system that rewards quality, efficiency, and innovation. The bipartisan, bicameral bill seeks to end the cycle of annual ‘Doc Fix’ crises that have created uncertainty for millions of Medicare providers and beneficiaries for over a decade and also create a system that promotes higher quality care for America’s seniors. Work continues toward an agreement to put this plan into place as well as make reforms to strengthen Medicare and extend vital health provisions and the Children’s Health Insurance Program.

The legislation—nearly identical to bills introduced in the House and Senate last year—was introduced by Rep. Michael C. Burgess, M.D. (R-TX), Senate Finance Committee Chairman Orrin Hatch (R-UT), House Energy and Commerce Committee Chairman Fred Upton (R-MI), House Energy and Commerce Committee Ranking Member Frank Pallone, Jr. (D-NJ), House Energy and Commerce Health Subcommittee Chairman Joe Pitts (R-PA), House Energy and Commerce Health Subcommittee Ranking Member Gene Green (D-TX), House Ways and Means Committee Chairman Paul Ryan (R-WI), House Ways and Means Committee Ranking Member Sander Levin (D-MI), House Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX), House Ways and Means Health Subcommittee Ranking Member Jim McDermott (D-WA), and Rep. Charles Boustany, M.D. (R-LA).

This proposal will:

  • Repeal the SGR and end the annual threat to seniors’ care, while instituting a 0.5% payment update each year for five years.
  • Improve the fee-for-service system by streamlining Medicare’s existing web of quality programs into one value-based performance program. It increases payment accuracy and encourages physicians to adopt proven practices.
  • Incentivize the use of alternative payment models to encourage doctors and providers to focus more on coordination and prevention to improve quality and reduce costs.
  • Make Medicare more transparent by giving patients more access to information and supplying doctors with data they can use to improve care.

The SGR formula—the mechanism that ties physician payment updates to the relationship between overall fee schedule spending and growth in gross domestic product (GDP)—is fundamentally broken. The flawed formula has led to 17 short-term patches enacted by Congress to prevent significant Medicare reimbursement rate cuts over the past decade. This bipartisan policy agreement is an important milestone in finally resolving the flawed SGR formula, providing certainty for seniors and their physicians, and creating a system that promotes the highest quality of care.

To view a section by section, click here

To read a one-page summary, click here.

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Subcommittees: