Healthcare Business News
Rep Allyson Schwartz

Lawmakers begin talks on SGR

By Rich Daly
Posted: January 24, 2012 - 5:30 pm ET

Democratic and Republican negotiators agreed that they need to produce a deal to avoid a 27.4% cut in Medicare physician pay rates from occurring March 1. But there were differences over whether to seek a permanent or temporary fix to the sustainable growth-rate formula and how to pay for any such measures.

The first meeting of congressional negotiators seeking common ground over a tax cut and temporary SGR patch measure that expires at the end of February consisted chiefly of its Senate and House members highlighting their priorities. For many, those priorities included addressing Medicare physician pay rates.

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“As a physician, I am acutely aware of how important it is for our seniors that they have a Medicare system that works for them,” Rep. Nan Hayworth (R-N.Y.) said.

Most House Republican negotiators called for a final compromise to extend the current rates for two years, plus small annual increases, partly paid for through $44.6 billion in healthcare cuts that have received varying degrees of support from the Obama administration. Those reductions include $8 billion from a prevention fund created by the healthcare reform law and $13.4 billion in that law's health insurance exchange premium subsidies.

Most Democrats called for total replacement of the SGR, which they would fund through tax increases on the wealthy and by claiming savings from the end of the Iraq War.

Such Iraq savings “offers a unique and limited time opportunity to solve a budgetary problem that grows more costly with each passing month,” Rep. Allyson Schwartz (D-Pa.) said.

Full SGR repeal is estimated at $300 billion, Schwartz said, and the expected cost will grow to $600 billion in five years.

The panel will meet again publically next week, although its members may meet before then for private negotiations.

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