Healthcare Business News

Estimated cost of SGR patch surges

By Andis Robeznieks
Posted: November 21, 2012 - 1:45 pm ET

Calculated to include the final 2013 CMS physician fee schedule, a new Congressional Budget Office estimate says that the cost of a one-year suspension of the scheduled 26.5% Medicare pay cut to physicians called for by the sustainable growth-rate formula has risen by more than 36%.

According to the CBO, the cost of a one-year "patch" with no increase in physician payments has risen to $25.2 billion from the previous estimate of $18.5 billion. (This figure is the sum of projections that include a $10.6 billion amount for 2013 and then steadily declining amounts through 2022 that equal $25.2 billion when added together.)

The latest numbers have led to more calls for repealing the SGR and for coming up with a more predictable method for calculating Medicare payment.

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"The sustainable growth-rate formula was created with the intent to lower the rate of growth in Medicare spending, but it has scheduled dangerous cuts to physicians, which Congress has repeatedly postponed," Dr. Jeremy Lazarus, president of the American Medical Association, said in an e-mailed statement. "The new information from the CBO shows that the rate of growth in Medicare spending has gone down, but now the cost for preventing the devastating cut has increased by $7 billion."

Earlier this month, Rep. Phil Gingrey, (R-Ga.), a physician and co-chair of the GOP Doctors Caucus, said he is "pretty confident" a one-year freeze will be approved during the upcoming lame-duck Congressional session. But Lazarus said the SGR needs to be replaced altogether.

"When lower rates of spending growth lead to a higher cost for reform, it is clear that the SGR does not work," Lazarus said. "It is time to stop this broken cycle in Medicare and move toward a program that ensures the best health outcomes for patients and a stable, rewarding practice environment for physicians."

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