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BLOG: Congressional budget office increases estimate for extending Medicare payments for physician services; ramps up debate over sustainable growth rate fix

From international law firm Arnold & Porter LLP comes a timely column that provides views on current regulatory and legislative topics that weigh on the minds of today’s physicians and health care executives.

On Nov. 1, 2012, the Centers for Medicare and Medicaid Services issued the physician fee schedule (PFS) final rule for calendar year (CY) 2013. At that time, the agency announced that Medicare’s payment rates for physician services will be reduced by 26.5% for services furnished during CY 2013. This theoretical decrease is driven by the formula used to calculate the sustainable growth rate (SGR), which limits how much Medicare payments to physicians can increase on an annual basis. The SGR should have reduced these payments each year over the past decade, but Congress has always voted to bypass these cuts as a regular stopgap measure.

Ted Lotchin

According to the Congressional Budget Office (CBO) estimate released this past July, another one-year extension by Congress would have cost $18.5 billion over 10 years. In an email to congressional staff released last week, however, the CBO now estimates that a one-year extension will cost $25.2 billion. This dramatic upward revision has reenergized the debate over finding a permanent solution to the SGR conundrum. The American Medical Association (AMA) and many other advocacy groups have called for the SGR to be repealed and replaced with an alternative reimbursement model. AMA president Jeremy Lazarus repeated this call in a statement released last Wednesday: “When lower rates of spending growth lead to a higher cost for reform, it is clear that the SGR does not work.”

The AMA’s statement may be accessed here through the organization’s website.

Ted Lotchin, JD, MPH, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-5250; email: Ted.Lotchin@aporter.com