I would not break out the champagne just yet...still, the announcement Feb. 6 that House and Senate lawmakers have reached an agreement to eliminate the sustainable growth rate formula in the current Medicare physician payment system and replace it with one based on quality measures and new reimbursement systems could signal the beginning of the end to a decade-long policy quandary in which doctors annually face reimbursement cuts.

The agreement between the Senate Finance Committee and the House Ways and Means and Energy and Commerce committees wouldrepeal the SGR and provide physicians’ a 0.5 percent payment update each year for five years while doctors transition to a new payment system.

Lawmakers said the agreement also would improve the fee-for-service system by streamlining Medicare’s existing web of quality programs into one value-based performance program and increase payment accuracy and encourage physicians to adopt proven care practices. It also would aid movement to alternative payment models to encourage doctors to focus more on coordination and prevention to improve quality and reduce costs, according to lawmakers.

 Now, the sticking point: the cost of the legislation, including the addition of payment extensions for some provider groups traditionally included in doc fix legislation, could be as high as $150 billion. Lawmakers have not said where they will get this money, but some or all of it likely will come out of the Medicare program, especially from providers. Providers have said they will vigorously fight any attempt to cut their payments to pay for a doc fix. Other possible money streams, such as cutting funding for the Affordable Care Act, overhauling medical malpractice law, or making drug makers offer rebates under Medicare, are likely to be non-starters. Senior groups also are likely to resist making beneficiaries pay more for their care to help fund a doc fix.

The clock is ticking, since a temporary pay boost for physicians expires March 31, although Congress could pass yet another short-term extension of current payment rates while they attempt to complete work on a permanent fix.
Steve Teske

Steve is Bloomberg BNA's senior congressional reporter for health care policy and has been with the company since 1988. He has covered every major piece of health care legislation to be considered by Congress in the last 20 years, including the Balanced Budget Act of 1997, the creation of the Medicare prescription drug benefit, and the Patient Protection and Affordable Care Act. He can be reached at


view Steve Teske's full bio