Congress Moves Closer to Permanent Repeal of Medicare’s SGR Formula

Thursday, January 2, 2014
By Lance O. Leider, J.D., The Health Law Firm and George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

On December 12, 2013, the U.S. House of Representatives passed a three-month patch to stabilize physiciansMedicare payments, delaying a nearly twenty-four percent (24%) cut in Medicare payments that was scheduled for physicians in 2014.

The delay gives lawmakers time to consider two bills developed by the House Ways and Means Committee and the Senate Finance Committee to permanently repeal Medicare’s Sustainable Growth Rate (SGR) formula. Both bills focus on shifting Medicare compensation from fee-for-service to pay-for-performance. According to Modern Healthcare, both committees voted to send the repeal bill to their respective chambers for a full vote, which may occur in early 2014. To read the entire article from Modern Healthcare, click here.

Under the current SGR system, physician payments are threatened every year. Congress has annually intervened and provided temporary fixes to avoid payment cuts to physicians.

Bills Similar But Not the Same.

As stated above, two bills to permanently repeal the SGR worked their way through committees in the House and Senate. The House Ways and Means Committee passed the Medicare Patient Access and Quality Improvement Act of 2013, and the Senate Finance Committee passed the SGR Repeal and Medicare Beneficiary Access Improvement Act.

The bills would repeal SGR, encourage the use of alternative payment models such as accountable care organizations (ACOs), combine three quality incentive programs into one, and make numerous other changes to the way Medicare pays for the delivery of healthcare.

Below is a list of the main differences between the bills.

The House bill includes:

-  0.5% pay increase for three (3) years;
-  No Medicare “extenders”;
-  Value-based performance approach; and
Medical malpractice protection.

The Senate bill includes:

-  Flat payment, with no set increase;
-  A number of Medicare “extenders,” for example: work geographic adjustment, payment for outpatient therapy, quality measure endorsement and selection;
-  No Medical malpractice language; and
-  Amendments and a number of modifications, for example: amendment to improve quality, and expand access to community mental health services; amendment permitting the use of telehealth technology in Alternative Payment Models (APMs), regardless of location of health care professional and Medicare beneficiary; amendment providing additional technical assistance to Small Rural Practices in the Value Based Performance (VBP) Program.

Issues That Still Need to be Resolved.

There are still some issues that lawmakers need to solve to pass any permanent SGR replacement legislation.

Neither the Senate nor the House bills included ways to fund the SGR repeal. This is a key hurdle for lawmakers to finally kill the SGR payment structure. Lawmakers will also have to figure out a way to consolidate the Senate and House bills.

Repealing SGR means a new framework for physician payments in Medicare. There is no doubt that this path to a permanent SGR repeal will be challenging.

Check Our Blog for the Latest Developments.

According to a MedPage Today article, physician groups hope that with the momentum of the bills reported out of authorizing committees in the House and the Senate, and the three-month extension of SGR cuts, lawmakers will be able to come up with a permanent repeal by early 2014. Click here to read the MedPage article.

Be sure to check our website regularly for any updates to this blog.

Contact Health Law Attorneys Experienced in Representing Health Care Professionals.

The Health Law Firm routinely represents pharmacists, pharmacies, physicians, nurses and other health providers in investigations, regulatory matters, licensing issues, litigation, inspections and audits involving the Drug Enforcement Administration (DEA), Federal Bureau of Investigation (FBI), Department of Health (DOH) and other law enforcement agencies. Its attorneys include those who are board certified by The Florida Bar in Health Law as well as licensed health professionals who are also attorneys.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at


What do you think about the possible repeal of SGR physician payment formula? What are your thoughts on the new proposed bill? Please leave any thoughtful comments below.


Zigmond, Jessica. “House Passes Budget Bill With Three-Month Doc-Pay Fix.” Modern Healthcare. (December 13, 2013). From:

Pittman, David. “3-Month ‘SGR Fix’ Passes House.” MedPage Today. (December 12, 2013). From:

About the Authors: Lance O. Leider is an attorney with The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area.  The Health Law Firm, 1101 Douglas Avenue, Altamonte Springs, Florida 32714, Phone:  (407) 331-6620.

George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida, area. The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

Tag Words: Medicare, Medicare sustainable growth rate, SGR, physician, doctor, physician pay, fee-for-service, Medicare reimbursement system, repeal of SGR, quality care reimbursement, physician pay cut, doctor pay cut, Medicare pay formula, volume based fee for service, defense attorney, defense lawyer, physician attorney, physician lawyer, health law firm, The Health Law Firm, Florida health law firm

"The Health Law Firm" is a registered fictitious business name of George F. Indest III, P.A. - The Health Law Firm, a Florida professional service corporation, since 1999.
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