Senate approves end to SGR

April 15, 2015

By a vote of 92-8, the U.S. Senate last night approved legislation ending the long-reviled formula for determining Medicare reimbursements. The vote came just hours before a 21% reimbursement cut would have gone into effect. The measure, which the U.S. House of Representatives passed three weeks ago, now goes to the president, who is expected to sign it.

The Sustainable Growth Rate (SGR) has flatlined.

By a vote of 92-8, the U.S. Senate last night approved legislation ending the long-reviled formula for determining Medicare reimbursements. The vote came just hours before a 21% reimbursement cut would have gone into effect. The measure, which the U.S. House of Representatives passed three weeks ago, now goes to the president, who is expected to sign it.

The legislation, titled the Medicare Access and CHIP [Children’s Health Insurance Program] Reauthorization Act of 2015, repeals the SGR formula and replaces it with annual 0.5% reimbursement beginning July 1 of this year and going through 2019.

In addition, doctors choosing to participate in “alternative payment models” will receive a 5% bonus. The legislation also consolidates Medicare’s existing quality and incentive payment programs-the Physician Quality Reporting System, the Value-based Modifier, and the Meaningful Use incentive programs-into a new Merit-based Incentive Program (MIPS.)

Related: SGR update: 'Best chance in years' to reform the flawed payment system

Medical societies, who have long pushed for SGR’s repeal, issued statements strongly endorsing the Senate vote. “Passage of this historic legislation finally brings an end to an era of uncertainty for Medicare beneficiaries and their physicians-facilitating the implementation of innovative care models that will improve care quality and lower costs,” said James Madara, MD, chief executive officer and executive vice president of the American Medical Association.

David Fleming, MD, MACP, president of the American College of Physicians, said, “Physicians and their patients no longer will have to be concerned with impending yearly payment cuts as a result of the flawed SGR formula and no longer will this burden of uncertainty be hanging over physician practices. Equally important, the legislation provides strong incentives for physicians to engage in activities to improve quality; streamlines existing quality reporting programs; and provides additional support to physicians who participate in patient-centered medical homes and other alternative payment models.”

Robert Wergin, MD, president of the American Academy of Family Physicians, said, “This legislation repeals the flawed sustainable growth rate formula that plagued Medicare physician payment for more than a decade. Once signed by President Obama, this new law will ensure that physicians receive stable and appropriate compensation for the services they provide to Medicare beneficiaries. Now physicians can focus on caring for their patients, and their patients can rest assured that care will not be interrupted.”

Although the legislation passed overwhelmingly in the House of Representatives, some observers had predicted it would face greater opposition in the Senate because the costs of SGR repeal are not fully funded and will thus increase the deficit. Partly for that reason, the Senate did not vote on the measure immediately after the House but instead waited until returning from an early April recess.

In addition to repealing SGR the legislation:

  • Provides $20 million annually from 2016 to 2020 to help smaller practices participate in MIPS or alternative practice models,

  • Extends funding for CHIP through fiscal year 2017,

  • Extends the “two-midnight” rule for Medicare coverage through fiscal year 2015, and

  • Declares a national objective of achieving widespread health information exchange through interoperable electronic health record technology by the end of calendar year 2018