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Senate Finance Committee Holds SGR Hearing and Asks Providers for Specific Recommendations

May 17, 2013—The Senate Finance Committee held a May 14 hearing titled “Advancing Reform: Medicare Physician Payments.” The hearing continues the committee’s efforts, including a series of committee hearings in 2012, to repeal the sustainable growth rate (SGR) formula and move the Medicare physician payment system away from fee for service and towards paying for quality [see Washington Highlights, July 13, 2012].

Prior to the hearing, Finance Committee Chair Max Baucus (D-Mont.) and Ranking Member Orrin Hatch (R-Utah) issued a joint May 10 letter asking health care provider stakeholders for specific proposals on how to ensure health care services are valued appropriately, ways to reduce unnecessary services, and how to help physicians transition to new payment models.

Chairman Baucus opened the hearing expressing his frustration with the ongoing SGR cycle, saying, “We need to get beyond this annual ‘doc fix’ ritual.  The year-in, year-out uncertainty is not fair to physicians or seniors.  Since 2003, Congress has made 15 short-term fixes to the SGR at a cost of nearly $150 billion.  In 2010 alone, we passed six short-term fixes. It is time to break this cycle.”

Baucus stressed the importance of capitalizing on the reduced Congressional Budget Office (CBO) SGR price tag, saying, “The most recent 10-year score for repealing the SGR is $138 billion.  While this is a large amount, it is more than $100 billion less than last year’s score.  This is a window of opportunity. We need to seize it.”

Sen. Hatch agreed that the reduced CBO score provided a significant opportunity to address the SGR and that Congress needed to act quickly, saying, “[W]e know from previous years that the CBO score has a tendency to fluctuate.  I believe we currently have a good window of opportunity before us. But, we must act soon.”

Sen. Hatch also mentioned the bipartisan letter sent to health care providers and stakeholders, saying it “builds on the discussions we started last year” with the goal of finding “a more stable foundation to pay physicians treating Medicare patients.”

Testifying before the committee, Medicare Payment Advisory Commission (MedPAC) Executive Director Mark Miller, Ph.D., agreed with Senators Baucus and Hatch, stating that MedPAC “believes that the SGR is fundamentally flawed and is creating instability in the Medicare program for providers and beneficiaries, and that the time to repeal the SGR is now.”  Dr. Miller added, “We urge the Congress to act now to take advantage of this lower estimate; if history is any guide, the cost of repeal could increase again.”

Sen. Maria Cantwell (D-Wash.) closed the hearing by briefly discussing with the panel the need to increase the number of graduate medical education residency positions to address the physician shortage and the increased demand for physicians.

After the hearing, CBO May 14 released an updated baseline, “Medicare's Payments to Physicians: The Budgetary Impact of Alternative Policies Relative to CBO's May 2013 Baseline,” which slightly increased its estimate of the cost to permanently repeal the SGR formula to $139.1 billion, up from $138 billion cited throughout the hearing.


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


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