CBO Estimates 10-Year Cost of SGR Repeal at $174.5 Billion
According to the latest Congressional Budget Office (CBO) figures, replacing the SGR-based Medicare physician-reimbursement formula over the next 10 years, as proposed in legislation introduced last year, would cost $174.5 billion. But a closer look at the CBO numbers reveals that the accrued physician-payment costs over the same 10 years would be an estimated $137.4 billion if current reimbursement rates were frozen through 2025. That’s a difference of (only) $37.1 billion.
Under current law, fees that physicians receive for Medicare services will be cut by about 21% beginning on April 1, 2015. Two pending pieces of federal legislation—HR 4015 and S 2000—would repeal the SGR formula, but the bills do not include suggestions for covering the cost of an SGR replacement.
The American Hospital Association has gone on record against the “rob-hospitals-to-pay-doctors” approach that some people have advocated, saying in January that it “cannot support any proposal to fix the physician payment problem at the expense of funding for services provided by other caregivers.”
If a permanent repeal of the SGR formula isn’t politically feasible until after the 2016 presidential election, Congress will probably approve another short-term “patch” this year. That would be the 18th time in 12 years that legislators have kicked this expensive can down the road.