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Client Alert: Congress Permanently Repeals The Sustainable Growth Rate

April 15, 2015
Susan B. Orr, Esquire

Last night, the Senate voted overwhelmingly to permanently repeal Medicare's sustainable growth rate formula for physician payments that had been in place since 1997, ending more than a decade of legislative gridlock on the issue.

The bill was approved 92-to-8 vote in the Senate, following passage in the House last month by a vote of 392 to 37. President Obama has endorsed the bill, saying it “could help slow health care cost growth.”

Without passage by Congress,  physicians would have faced a 21% cut in Medicare fees starting Wednesday or Thursday, April 15 or April 16, 2015.

The bill provides physicians an annual 0.5 percent pay raise for five years, starting July 1, 2015. In 2020, Medicare payments to physicians will be frozen for five years and physicians will be asked to participate in programs that pay bonuses to physicians who meet quality-of-care targets. 

Starting in 2026, Medicare reimbursement to physicians will again rise by at least a quarter of a percentage point per year. The thrust of the bill is to move away from fee for service payments based on volume of visits to physician payments based on the quality and value of the services they provide.

It is anticipated that this bill would save $70 billion by limiting or cutting some payments to hospitals and other health-care providers and requiring Medicare recipients with incomes of more than $85,000 a year to pay higher Medicare Part B premiums starting in 2018.