12-Month SGR Deal Passed by the Senate

On Wednesday, December 8, the U.S. Senate passed by unanimous consent a 12-month fix to the Sustainable Growth Rate (SGR) formula.  The fix will halt a 25 percent cut to Medicare physician payments set to occur January 1. The one-year fix, included as part of the “The Medicare and Medicaid Extenders Act of 2010,” will cost an anticipated $19.2 billion. The legislation now heads to the U.S. House where quick consideration and passage are anticipated.

The legislation avoids the massive looming cuts, but does not increase payments thus freezing them at 2010 levels. Spending for the payment fix is offset through a change to the Patient Protection and Affordable Care Act (PPACA). PPACA provides tax credits for individuals who are not covered by an employer and whose incomes are below a certain amount to purchase insurance on exchanges.  If the government overpays a subsidy to these individuals, it can currently only recoup up to $400. To pay for the Medicare SGR fix, the amount the government can recoup from individuals will be increased.

“The Medicare and Medicaid Extenders Act of 2010” also includes provisions extending the current Medicare work geographic adjustment floor of 1.0 through December 31, 2011.