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E&C Health Subcommittee Holds Two-Day Hearing on SGR

January 23, 2015—The House Energy and Commerce Health Subcommittee Jan. 21-22 held a hearing to discuss Medicare physician payment reform and ongoing efforts to repeal and replace the sustainable growth rate (SGR) formula. The hearing comes ahead of an April 1 expiration of the current SGR patch, which was signed into law last year after Congress was unable to identify offsets for the SGR Repeal and Medicare Provider Payment Modernization Act of 2014,bipartisan, bicameral legislation to reform the Medicare physician payment system [see Washington Highlights, April 4, 2014]. 

Subcommittee Chair Joe Pitts (R-Pa.) opened the hearing highlighting the tremendous work accomplished in the last Congress and stated, “Now with the policy agreed to, the question we face is how to responsibly pay for SGR reform in a manner that can pass both Houses of Congress and be signed by the President. Coming up with approximately $140 billion in offsets will not be easy, but it is a task we must embrace.”

Ranking Member Frank Pallone (D- N.J.) expressed different concerns regarding identifying offsets stating, “I believe that because the SGR is the result of a budget gimmick, and we have already spent $169 billion paying to fix the problem, offsets, especially those within our health programs, are not necessary. And if we must include offsets – the war savings, which are known as the Overseas Contingency Operations (OCO) funds, could be used.”

Policy experts and provider and trade association representatives testified over the two-day hearing, including American Hospital Association President and CEO, Richard Umbdenstock.

Rep. Billy Long (R-Mo.) asked Mr. Umbdenstock about the need to build consensus amongst “the provider community and the members of Congress” in identifying offsets for potential reform.

Mr. Umbdenstock replied, “Every thought we have about this has to be put up against the prospect of a 21 percent cut to physicians, with physicians, probably many of them, backing out of the program and causing huge access problems for Medicare beneficiaries.” He further added, “Hospitals have already absorbed $121 billion in cuts and we don’t believe that we should be asked, yet again, to make sacrifice in that sense. We need to see shared responsibility, all of us need to contribute to the solution to this problem.”

Rep. Long (R-Mo.) then pivoted to provider access concerns, asking, “Do you think we might suffer from a physician shortage if these cuts continue?”

Mr. Umbdenstock responded, “I think we already do, and we’re supportive of lifting the caps on graduate medical education (GME) positions. That’s going to be a long term solution, we need other solutions in the meantime, but certainly it’s going to encourage some physicians to think second and third about continuing the program or even retiring.” 

In November, the Congressional Budget Office (CBO) scored the cost of the bipartisan, bicameral legislation developed in the last Congress at $144 billion dollars over ten years. Should Congress fail to act, Medicare physician payments will be cut by nearly 21 percent on April 1.


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

Courtney Summers
Senior Legislative Analyst
Telephone: 202-862-6042


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

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