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Sustainable Growth Rate (SGR)

As you may know, Medicare reimburses health care providers for various procedures they perform.  These reimbursements are made according to a fee schedule, which is updated annually by a formula called the Sustainable Growth Rate (SGR).  If spending exceeds the established targets, payment rates to providers are cut; if spending is below the target, payment rates are increased.  The intent of the formula is to place a restraint on overall increases in Medicare spending for physicians' services.  However since 2003, Congress has chosen to override current law in order to prevent reimbursements from being cut as a result of the formula.  These temporary patches have resulted in spending nearly $170 billion to avoid the unsustainable cuts imposed by the SGR. 

Rather than passing temporary fixes, I have long preferred to address the more important matter of wholesale reform to the Medicare reimbursement system.  Physicians should not have to wait on Congress to act every year in order to prevent pay cuts that are arbitrarily determined by an outdated formula.  Fundamental reforms to Medicare and our broken health care system are urgently needed.  That is why I was pleased to support H.R. 2, the Medicare Access and CHIP Reauthorization Act of 2015.  H.R. 2 would provide stability for seniors, foster a more patient-centered system, and provide structural reforms that would strengthen Medicare.

In part, this legislation would start to move us to a patient-centered system.  It would cancel the cuts and instead give doctors a modest increase for the next five years.  Every year after, doctor payments would grow to depend more and more on results.  Our plan would set up one streamlined program that would reward doctors who met performance goals and improved seniors' health.  Over time, Medicare would reward quality over quantity, and seniors would get better care because of it. 

Our plan would also achieve savings by making two other structural reforms.  First, we would ask higher income seniors  to contribute more to their care—something we have called for in the House Republican budget for years.  Starting in 2018, seniors who make more than $133,000 a year would pay a higher premium for their doctor and prescription-drug coverage.  Secondly, our plan would discourage unnecessary doctor visits and give seniors the incentive to seek out the most effective care.  Many seniors have "Medigap" insurance—a private plan that helps pay for costs that Medicare does not cover, such as co-payments and deductibles.  These plans insulate people from costs and, experts believe, encourage the overuse of health care.  Beginning in 2020, this agreement would prohibit Medigap plans for covering the first $147 of out-of-pocket spending, so cost is once again a consideration in health care decisions.

Further, this legislation continues the extenders included in the Protecting Access to Medicare (PAMA) Act of 2014 and provides funding for Community Health Centers through 2017.  These provisions ensure that individuals will have easier and more affordable access to their healthcare.  Additionally, it reauthorizes the Child Healthcare Insurance Program (CHIP), a program that provides health care coverage to more than 8 million children and pregnant women, for two years.

On March 26, 2015, the House passed H.R. 2 in bipartisan fashion and with my support by a vote of 392 to 37.  I was happy to join my House colleagues in this important step toward patient-centered health care.  On April 14, 2015, the Senate passed H.R. 2 with bipartisan support by vote of 92 to 8.  After years of manufactured crises, this bill will give doctors the certainty they need and seniors the security they deserve.  And although we have a lot more work to do to save Medicare, this plan is a firm step to strengthen the program.