CBO: Cost of SGR repeal continues to drop

The declining cost increases in healthcare delivery has apparently had a collateral effect on repealing the sustainable growth rate formula, as the Congressional Budget Office has reduced the price tag of eliminating the unpopular method for gauging physician payments by tens of billions of dollars.

The CBO has reduced the cost of repealing the SGR over 10 years to $116.5 billion, MedPage Today reports. That's a drop of $139 billion from last February and down significantly from the $271 billion the CBO had projected it would cost to repeal the law back in August, 2012.

The declining cost of an SGR repeal has potentially made it more politically feasible to eliminate the formula, which has been in existence since the late 1990s but not actually used in nearly a decade. Physicians have claimed the formula would implement severe cuts in payments they receive for treating Medicare patients.

"The remarkable slowdown in the growth rate for Medicare spending on physician services is reflected in Congressional Budget Office's newly reduced cost estimate for replacing the failed SGR payment formula," said American Medical Association President Ardis Dee Hoven, M.D. The new estimate serves once again to demonstrate the timeliness of congressional action to reform the Medicare physician payment system once and for all."

The AMA's heavy lobbying prompted Congress to implement years of "fixes" that bypass planned cuts under the SGR formula and instead have led to modest payment increases most years.

Recent proposals for replacing the SGR includes a 10-year pay freeze for physicians participating in the Medicare program. Instead, the plan would encourage physicians to engage in bundled payments and shared savings programs. Physicians who derive a large share of their payments from bundled payments and shared savings initiatives would receive annual bonuses of 5 percent of the payments.

To learn more:
- read the MedPage Today article
- here's the CBO cost report

Related Articles:
Congressional leaders' proposal would phase out Medicare fee-for-service
Commission: Phase out fee-for-service payment by 2020
UnitedHealth: Payment reform could save $600B
CBO report: Medicare SGR repeal will cost $175B
MedPAC reaffirms calls for hospital pay bump, SGR repeal
MedPAC pushes SGR repeal, but few pay changes

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