President Signs Budget Agreement; Includes Three Month SGR Patch

December 26, 2013

On December 26, 2013, President Obama signed the bipartisan budget agreement into law.  Earlier in December, H. J. Res 59 has been passed by the House of Representatives (332-94) and the Senate (64-36).

The budget agreement includes a three-month Sustainable Growth Rate (SGR) patch, which will postpone a nearly 24% cut in Medicare pay for physicians from January 1 until April 1 and instead provide a temporary 0.5 percent SGR update. The SGR system was put into place as a result of the Balanced Budget Act of 1997, and serves as a means for the Centers for Medicare and Medicaid Services (CMS) to regulate spending on Medicare physician services. Each year, CMS develops a report on the previous year’s spending, and Congress adjusts the payment rates for Medicare physicians accordingly. For the past several years, the formula used as part of the SGR system has recommended that payments for Medicare physicians be cut drastically. If this were to happen, many physicians would be forced to leave the Medicare system, causing a large gap in patient care. To avoid this situation, Congress has stepped in with temporary fixes to avoid these cuts.

Over the past several months, the House Ways & Means Committee has been working with the Senate Finance Committee on bipartisan legislation that would permanently replace the SGR. December 12, the Ways and Means Committee passed H.R. 2810, the Medicare Patient Access and Quality Improvement Act of 2013 with a 39-0 vote. In the afternoon, the Finance Committee passed the SGR Repeal and Medicare Beneficiary Access Improvement Act by voice vote.