The leaders of the House Energy and Commerce Committee have come out with a proposal for overhauling the Medicare physician payment system.
The committee has posted a discussion draft of a “sustainable growth rate” (SGR) reform proposal on its section of the House website.
Members of Congress first included the SGR concept in the Balanced Budget Act of 1997 (BBA). The idea was to tie annual growth in per-enrollee Medicare spending to the annual growth rate in U.S. gross domestic product (GDP).
In practice, the SGR cuts would apply only to physicians and some other types of health care professionals, not to hospitals.
The SGR provisions has a big, indirect effect on the commercial health insurance market, because commercial health insurers often pay providers fees tied to the Medicare rates.
In some cases, for example, a plan may pay out-of-network providers 125 percent of the Medicare rate for some services, or it may arrange to pay in-network providers 110 percent of the Medicare for all services.
Health care spending has grown much faster than GDP since 1997. Physicians and other affected providers have fought many successful battles to persuade Congress to put off applying SGR adjustments.
If Congress were going to cut Medicare physician reimbursement rates sharply enough to get back on the course required by the BBA SGR provision, the Medicare physician reimbursement rate would have to fall by about 27 percent.