3-month SGR 'Doc Fix' expires March 31, 2014

United States SenateIn December 2013, physicians received a reprieve from financial disaster as the Senate approved a bipartisan budget deal — that had already been passed by the House — that delayed an almost 24% reduction in Medicare pay from January 1 to April 1.

The 3-month “doc fix” in the budget bill gave physicians a 0.5% raise for the first 3 months of 2014, much to the delight of organized medicine. However, medical societies did not got everything they wanted. The bill both preserved an annual 2% reduction to Medicare rates called for by the across-the-board budget cuts called sequestration and extended it 2 years beyond its original expiration date of 2021.

Aside from the temporary doc fix, the bill approved by the Senate replaced $63 billion worth of sequester cuts over the course of 2 years in both defense and nondefense programs and reduced the budget deficit by a net $23 billion. It set the stage for lawmakers to forge an even more comprehensive budget agreement in the first quarter of 2014, which is needed to forestall another partial government shutdown, such as the one in October, and to avoid defaulting on federal debt.

With the Congress adjourning for a week long recess during the week of March 17, there is little time for them to come up with a payment plan for replacing the SGR. This year is the first time both parties attempted to construct legislation that would replace the SGR (Medicare Sustainable Growth Rate) with some type of pay–for-performance payment system when the House Ways and Means Committee, House Energy and Commerce Committee, and Senate Finance Committee leadership introduced a bi-partisan bill to repeal and replace the Medicare Sustainable Growth Rate (SGR) formula in February. However, the problem was that they could not agree on a way to pay for it. The current SGR fix expires on March 31st and Congress would need to come up with a plan before then that would find $120 – $130 billion in savings to cover the SGR repeal. More than likely Congress will propose a nine-month SGR patch in order to give members additional time to find the necessary savings for a permanent repeal of the SGR. The patch legislation is expected to be introduced during the week of March 24. The estimated price-tag for the nine month patch is $15 billion of which $6 billion may come from disproportionate share hospital (DSH) payments. The other $9 billion is yet to be determined.

 

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