After Decades of Uncertainty, the Sustainable Growth Rate Formula Is Repealed by Congress


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The U.S. Congress recently did something remarkable: both parties reached across the aisle and overwhelmingly passed H.R. 2, a bill that will permanently repeal the sustainable growth rate (SGR), the problematic formula for Medicare reimbursement. It just needed the President’s signature, which it received on April 17, ending an era of uncertainty for the oncology community. In typical D.C. fashion, the Senate’s vote came just a few nail-biting hours before physicians faced a 21% Medicare pay cut, which would have been untenable for many of the nation’s community practices.

No More ‘Doc Fixes’

Enacted by the Balanced Budget Act of 1997, the SGR was designed to control Medicare spending on physician services, to ensure that the yearly increase in the expense per Medicare beneficiary does not exceed the growth in the gross domestic product. It is a complex and unwieldy tool, which has long been criticized by health-care experts but never fixed.

On January 1 of every year, the physician fee schedule has been updated to reflect its need to match a target number, related to the sustainable growth rate. Congress has had the power to suspend implementation of the SGR, long known in the vernacular as a “doc fix,” which it has done routinely year after year, fueling frustration in the medical community.

ASCO and other major cancer organizations have lobbied vigorously over the years to repeal the SGR and move to a more stable and equitable way to determine Medicare payment. With the passage of the bill, known as the Medicare Access and CHIP Reauthorization Act of 2015, lawmakers contend the repeal of the SGR is immensely meaningful not just for physicians who will avoid deep cuts in Medicare payment, but also for the long-awaited move toward value-based reimbursement as a whole.

ASCO and other leaders in the cancer community support the idea of value-based reimbursement, as long as the new payment models are implemented effectively, taking into consideration the multiple nuances of oncology practice that are more difficult to place dollar value on than procedure-based medical care.

Moving Forward

Under the bill, the current reimbursement schedule will be replaced with a 0.5% increase in Medicare physician reimbursement starting April 1, 2015 through December 2015 and then annual 0.5% increases lasting through 2019. After a period of stability, the bill will also merge various government-reporting programs such as the “meaningful use” program for electronic health records and several quality-reporting initiatives into a new merit-based incentive payment system that would encourage physicians to embrace alternative payment models, such as accountable care organizations.

A “technical advisory” committee will be charged to recommend and review how to develop alternative payment models. In short, several measures will be developed to judge the quality of care provided and how physicians will be rewarded or penalized based on their performance. There is a lot of heavy lifting ahead in order to transform words in a bill into actual payment models that will be seamlessly adopted by busy oncologists, many of whom are running very tight margins. We can expect intense lobbying from the oncology community on every component of implementation of the bill.

The SGR was an inconsistent and flawed tool, creating tension and uncertainty among doctors who care for the nation’s vulnerable cancer patients. Its repeal is evidence that beneficial change is possible, even in today’s contentious political climate. ASCO and other cancer organizations have been ahead of the curve in the move from quantity to quality care. H.R. 2 is a work in progress, but all interested parties are glad that the SGR is now a thing of the past. ■



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