Since 1997, the federal government has used a system referred to as the Sustainable Growth Rate (SGR) to pay doctors that participate in the Medicare program. The SGR has aimed to slow increasing costs related to Medicare by limiting and reducing payments to doctors. However, the SGR has seen a lot of backlash from doctors, with many indicating they would not participate in the Medicare program if payments were reduced. Many doctors have said the payments they receive from Medicare don’t cover the actual cost of care, and many insurance companies agree, stating they have to pay amounts above the actual cost of care to make up for payment shortages from Medicare.  

 

As a result of the SGR, doctors have been faced with payment cuts 17 times, and Congress has passed a “band-aid” bill to stop the payment reduction 17 times. On April 16, 2015, President Obama signed into law a bill that permanently changes how Medicare doctors are paid, ending years of having to make last minute changes and delays to the SGR. The new bill is seen as a significant improvement because it encourages payments based on quality of care rather than quantity of care.  

 

Many people were unsure if a Republican Congress and Democratic President could come to terms on a solution to the SGR, and the passage of the bill is being viewed as a rare bipartisan achievement. If the bill hadn’t been signed, doctors would have faced a 21% reduction in payment later this month. President Obama considered it such a large bipartisan achievement that he plans to hold a reception for lawmakers next week to acknowledge their work.

 

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The materials contained within this communication are provided for informational purposes only and do not constitute legal or tax advice.