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Now is the Time: Repeal and Reform the Medicare Physician Payment System

By U.S. Rep. Allyson Y. Schwartz

Nearly 50 years ago, we made a promise to ensure quality, affordable healthcare for all American seniors.  In order to protect that promise, we must promote excellence and efficiency in Medicare, while being more fiscally responsible. One of the most important ways we can achieve those critical goals is to fix the broken Medicare physician payment system, which has created uncertainty and instability for seniors, health care providers, and the federal budget for decades.

Every year for over a decade, the Sustainable Growth Rate (SGR) formula—which is used to determine payments for physicians’ services under Medicare—has threatened to impose steep cuts in Medicare payments for care provided to America’s seniors.  These temporary measures ensure continued instability for physicians and seniors alike. Currently, providers face a 27.4% cut to Medicare payment rates on January 1, 2014.  In Pennsylvania alone, 2.3 million seniors could lose access to their doctors. This is unacceptable. It is time for Congress to repeal and replace the SGR.

Medicare payment policies have a direct impact on the care that beneficiaries receive and the sustainability of Medicare in the long term. Steep cuts to providers threaten to drive physicians out of Medicare, creating severe access problems for our seniors, and lead to uncertainty and instability for patients, health care providers, and the federal budget.  By perpetuating this perennial fiscal crisis for Medicare for over a decade, we are failing our care providers on the front lines, taxpayers, and America’s seniors.

U.S. Rep. Allyson Schwartz

We all agree that the rate of growth in health care spending in the United States is unsustainable. But, the SGR is the wrong approach to containing costs, improving value, and increasing efficiency in health care delivery. Failure to repeal the SGR and replace it with a meaningful payment mechanism for physicians prohibits the drive towards innovative delivery system reforms, serves as a disincentive to physician participation in Medicare, and inhibits access to doctors for millions of seniors. Maintaining the status quo of the broken Medicare physician payment system is no longer an option.

I am proud to have re-introduced the bipartisan Medicare Physician Payment Innovation Act (H.R. 574) with Rep. Joe Heck, D.O. (R-NV) on February 6th.   This legislation, endorsed by 29 national organizations representing a broad array of providers, seniors and consumers, repeals the flawed SGR formula, implements new delivery systems and payment reforms to ensure long-term stability in the Medicare physician payment system and contains the rising growth in health care.  The Medicare Physician Payment Innovation Act:

  • Permanently repeals the SGR formula
  • Provides annual positive payment updates for all physicians for four years
  • Establishes predictable reimbursement rate updates that accurately reflect the cost and value of providing health care services in coordinated care models
  • Ensures Medicare beneficiaries access to preventive care, care coordination, and primary care services through increased payment updates for those services
  • Provides new payment model options to meet the diverse needs of providers across medical specialties, practice types, and geographic regions
  • Tests and evaluates new payment and delivery models
  • Stabilizes reimbursement rates for providers in the traditional fee-for-service payment model who demonstrate a commitment to quality and efficiency

The framework for this legislation has garnered broad bipartisan support over the past year. Republicans and Democrats across the ideological spectrum agree that the payment system must be repealed and that the rate of growth in health care spending in the United States is unsustainable. Recently, House Energy and Commerce Committee Chairman Fred Upton (R-MI) and House Ways and Means Committee Chairman Dave Camp (R-MI) released a framework that, like the Medicare Physician Payment Innovation Act, outlines three phases to reform the way Medicare reimburses physicians, including SGR repeal, a period of stable updates, and a focus on quality and efficiency. I am encouraged that Republicans and Democrats alike have embraced the concepts in my legislation and I am committed to working together to enact a fiscally responsible and permanent solution to solve this problem.

There is reason to be optimistic about our goal to repeal the SGR formula this year.  The cost of repealing the SGR formula has decreased this year from $245 billion to $138 billion, and its repeal has bipartisan support. For far too long, we have buried the true cost of this failed policy through annual overrides of scheduled cuts and a false expectation that these cuts will eventually be made. 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, and assures seniors’ access to the care they need.

I look forward to working with Representative Heck and my Republican and Democratic colleagues on the Ways & Means Committee to pass legislation this year that fully repeals the SGR and moves us toward our shared goals of rewarding quality, providing better integration and coordination of care, and ensuring seniors get the care they need when they need it. There is no excuse for further inaction.

We have a choice: deny and defer this problem once again or seize the opportunity to pass a permanent repeal of the SGR. Repealing the SGR and laying the groundwork to change the physician payment system to reward quality are both necessary to move the American health care system forward. 

Denying and deferring are no longer enough. Members of Congress – as well as the physician community – must work together to put an end to this unpredictable, unstable, and unsustainable policy once and for all and set Medicare on a more stable and fiscally sound path for current and future beneficiaries.


U.S. Representative Allyson Y. Schwartz is currently serving her fifth term representing Pennsylvania’s 13th Congressional District.

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