SGR repeal bill would cost more than $180 billion, CBO says

A Senate bill to repeal and replace Medicare's physician reimbursement system and to extend certain Medicare programs would cost about $180 billion over the next decade, according to the Congressional Budget Office, which released the estimate late Wednesday night.

The estimate came five days after the House of Representatives passed a bill also aimed to repeal the SGR, but the Senate is unlikely to vote on that bill because it contains an amendment that excuses people for five years from the healthcare reform law's financial penalty for not purchasing health insurance. The CBO estimated that this add-on would increase the number of uninsured Americans by about 13 million in 2018.

The Senate returns from recess on March 24 and must act quickly if it still wants to move forward with the bill. Physicians face a 24% Medicare pay cut on April 1 if lawmakers pass nothing.

The bill introduced last week by Senate Finance Committee Chairman Ron Wyden (D-Ore.)—the Medicare SGR Repeal and Beneficiary Access Improvement Act of 2014—reflects ideas supported by the Senate Finance, House Ways and Means and House Energy and Commerce committees to repeal and replace the SGR. It also contains funding for a variety of expiring programs (so-called Medicare extenders) viewed as critical to rural hospitals, such as outpatient therapy caps, ambulance add-on payments and the low-volume hospital adjustment.

However, the bill didn't provide a mechanism to pay for the SGR fix or the extenders. According to sources familiar with SGR negotiations on Capitol Hill, Wyden is open to using overseas contingency operations funds—which are used to pay for the war in Afghanistan and other overseas operations—to offset the cost of the bill.

Had the bill been just a straight forward SGR repeal bill, it would have cost just under $140 billion over the next decade. The extenders tacked on an additional $41 billion in costs over the same period, bringing the cost to $180 billion.

The bipartisan Committee for a Responsible Federal Budget said the bill will actually cost $215 billion over the next decade. Its estimate includes $35 billion in interest.

Follow Virgil Dickson on Twitter: @MHvdickson