CBO report: Medicare SGR repeal will cost $175B

A Congressional proposal to repeal the much-hated Medicare sustainable growth rate (SGR) formula and replace it with a system that rewards providers for high-quality care would cost the federal government $175 billion by 2023, according to the Congressional Budget Office. 

The Medicare Patient Access and Quality Improvement Act of 2013 unanimously passed the Energy and Commerce Committee in July and will now head to the full chamber. Under the bill, Medicare physician reimbursements would grow 0.5 percent a year between 2014 and 2018 before payments are based on quality-measure performance under the new Quality Update Incentive Program, FierceHealthcare previously reported.

But the bill, H.R. 2810, doesn't provide a way to pay for itself and adds new spending items, according to MedPage Today. Previously, the article said, the CBO estimated the cost of an SGR repeal to total $138 billion but the Congressional bill adds many spending items.

According to the CBO, if Congress approves the bill in late 2013, the alternative system would increase federal direct spending by $175.5 billion by 2023. The bill would eliminate the cuts in payment rates that will occur under current law for services on the physician fee schedule. CBO estimates those updates alone would increase direct spending by $63.5 billion through 2018.

Furthermore, beginning in 2019, the bill will give providers a choice to report certain quality measures and adjust payment amounts by a bonus or penalty based on how well they perform on those quality measures and clinical practice improvement activities.

Taking into account the effect of the automatic 0.5 percent annual update that would begin in 2014, CBO estimates enacting the Quality Update Incentive Program and alternative payment model mechanisms would increase direct spending by about $112 billion over the 2019-2023 period. That increase, in combination with the $63.5 billion cost of the automatic updates during the 2014-2018 period, would result in a total increase in direct spending of $175.5 billion over the 2014-2023 period, the CBO said.

For more:
- read the CBO report (.pdf)
- here's the Medpage Today article

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