Congress repeals SGR following more than a decade of advocacy

On Tuesday, the U.S. Senate voted to repeal the Medicare sustainable growth rate (SGR) formula, an action the AOA and the osteopathic profession have been advocating for throughout more than a decade.

The repeal is part of the Medicare Access and CHIP Reauthorization Act of 2015, which the U.S. House of Representatives also approved.

The Centers for Medicare and Medicaid Services began using the SGR to calculate payments to physicians for providing services to Medicare patients in 1998. Since then, Congress has repeatedly passed last-minute legislation to prevent the SGR formula’s steep cuts to physician payments. In 2014, a Congressional patch saved physicians from a 24.4% payment cut—but only temporarily. On April 1, the latest patch expired, cutting physician Medicare payment by 21%.

The new legislation fully repeals the SGR formula. Physicians no longer have to worry about such drastic looming cuts. In place of the SGR formula, they will see a 0.5% payment increase in the second half of 2015 and 0.5% raises every year following through 2019. In addition, the bill will create a new Medicare payment system based on quality of care rather than volume. The new system will encourage physicians to use alternative payment models such as the patient-centered medical home.

DOs react to repeal

“I am overjoyed,” says AOA trustee and seasoned advocate Richard Thacker, DO. “My colleagues and I have put so much time and effort into advocating for this change. I’m extremely happy to see SGR repeal finally come through as it needed to years ago. It’s an incredible achievement, and my colleagues at the AOA and the Florida Osteopathic Medical Association worked incredibly hard to help make it happen.”

An internist with a hospital-managed group in Tallahassee, Florida, Dr. Thacker notes that hospitals and practices have constantly struggled to plan for the future because they were uncertain what their Medicare payments would be.

“We’re making long-term investments in our practices,” he says. “We’re not making improvements to last for a few weeks, we’re making improvements to last for years. So we need to be able to look forward over a period of several years and know what to expect in order to invest income in our employees and in our facilities.”

The constant uncertainty caused many practices to hold off on acquiring new technology, offering new services and even giving raises to employees, Dr. Thacker says.

However, he notes that he hasn’t been as directly affected by the SGR formula as physicians in private practice. Employed family physician Wayne Reynolds, DO, also says his colleagues in private practice have been hit harder by the SGR formula.

“Some years, the patch would be delayed,” says Dr. Reynolds, who practices in Gloucester County, Virginia. “Physicians in private practice are really dependent on that income. I know it was a struggle for them.”

Obstetrician-gynecologist Teresa Hubka, DO, runs a private practice in Chicago and says she’s struggled to continue providing care for her Medicare patients.

“My business manager has been saying that we need to see fewer Medicare patients because we’re not being paid for what we do, and there’s a delay in the payments,” she says.

With the SGR formula repealed, Dr. Hubka says she’ll have an easier time keeping her Medicare patients. She notes that the legislation is not only a big win for physicians, but also a boon for patients.

“A lot of smaller independent practices cannot afford to treat Medicare patients,” she says. “So repealing the SGR formula, and paying physicians what I think they deserve to be paid, will help provide better access to care for patients.”

Dr. Hubka says she’s encouraged to see that lawmakers are listening to physicians’ concerns, and she’s hopeful that this legislation is a sign of more helpful laws to come. She plans to thank her senators and representative for their support.

“I’m going to let them know how grateful I am,” she says. “The SGR formula has been a problem for many years, and it’s part of the problem of health care. I feel like we’re starting a new day. It’s just wonderful to get rid of the SGR formula for good.”