Skip to Content

Filter by:

Washington Highlights

Schwartz, Heck Introduce Bill to Repeal and Replace the SGR; Senate Finance Holds SGR Roundtable

May 11, 2012—Reps. Allyson Schwartz (D-Pa.) and Joe Heck, D.O., (R-Nev.) March 9 introduced the Medicare Physician Payment Innovation Act (H.R. 5707), legislation that would permanently repeal the Medicare sustainable growth rate (SGR) formula, prevent a scheduled cut of over 30 percent in Medicare payments to physicians on Jan. 1, 2013, and continue the transition to new payment and health care delivery models.

The bill establishes a five-year period of stability.  In 2013, payments to all physicians would remain level and then would increase in each of the following four years by 0.5 percent for specialty physicians and by 2.5 percent for primary care services to “ensure access.”

In an effort to replace the current system, the bill instructs the Centers for Medicare and Medicaid Services (CMS) to produce, by October 2016, no fewer than four alternatives to the traditional fee-for-service system (FFS) for physicians who are unable to participate in existing delivery and payment reform models.

The bill would not force physicians to transition to the new delivery models; however, those who continue using the FFS system would receive decreasing payments of up to 5 percent for services beginning in 2019-2022.

Rep. Schwartz said, “Now is the time to fix the broken system once and for all by moving forward with a payment system that rewards quality and value, saves lives, and assures seniors’ access to the care they need.” Rep. Heck echoed her comments, saying, “This bill replaces the flawed sustainable growth rate used for physician reimbursements, providing long-overdue certainty for physicians, and ensuring that Medicare beneficiaries have access to their physicians.”

The Senate Finance Committee also is considering ways to repeal and replace the SGR, holding the first of a series of roundtable discussions on April 10. The discussion focused on the history and current state of the SGR, with future meetings to focus on Medicare physician payment models.

The bipartisan group of senators gathered to hear testimony and ask questions of four former administrators of CMS and its predecessor the Health Care Financing Administration (HCFA). Bruce Vladeck, Ph.D., senior advisor, Nexera, Inc., said that “[a]ny health care financing system must address… two basic questions: how to pay physicians, and how to limit the costs both of direct payments to physicians and the related behaviors such payments may encourage or deter.”

Mark McClellan, M.D., Ph.D., senior fellow, Brookings Institution, suggested that changes moving forward “need leadership from the physician community,” and reforms need to “support high-quality, patient-centered care,” and the existing reforms that work use a form of “‘case management’ or per-patient payment.” All the witnesses suggested using a form of bundled payment, and they also agreed upon ensuring physicians some safety from litigation.

Senate Finance Chair Max Baucus (D-Mont.) commended the witnesses for their insight and asked them to submit to the committee their recommendations for a new payment system. Other witnesses included Gail Wilensky, Ph.D., senior fellow, Project HOPE; and Thomas Scully, J.D., senior counsel, Alston & Bird LLP.


Len Marquez
Director, Government Relations
Telephone: 202-862-6281


envelope on a green background

Subscribe to Washington Highlights

RSS icon

Subscribe to RSS

Washington Highlights, a weekly electronic newsletter, features brief updates on the latest legislative and regulatory activities affecting medical schools and teaching hospitals.

Past Issues

For More Information

Jason Kleinman
Sr. Legislative Analyst, Govt. Relations
Telephone: 202-903-0806