House passes SGR repeal, sends bill to Senate

By an overwhelming margin of 392-37, the U.S. House passed a bill Thursday that would permanently replace the Medicare sustainable growth rate (SGR) formula. Attention will now turn to the Senate, which must pass the bill before April 1 to head off significant physician pay cuts.

In repealing the SGR, the $214 billion bill would put in a place a 0.5 percent payment update each year for five years. Also included in the package are incentives to shift to value-based payment models, a means testing component that would raise costs for some high-income Medicare beneficiaries, and a two-year extension for the Children’s Health Insurance Program (CHIP).

The measure would put an end to a series of constant patches to a 1997 law that has threatened to cut physician reimbursement for years. Last year’s temporary fix expires March 31, and a pay cut of more than 21 percent would then go into effect if the repeal measure is not sent to and signed by President Barack Obama.

The president, for his part, has applauded the work of Congress to fix the Medicare payment system. “I've got my pen ready to sign a good, bipartisan bill — which would be really exciting. I love when Congress passes bipartisan bills that I can sign," he said during a recent speech at the White House.

House leadership from both parties have been unusually cooperative in the effort, with Speaker John Boehner (R-Ohio) calling the bill “the first real entitlement reform in nearly two decades,” and Minority Leader Nancy Pelosi (D-Calif.) saying the measure would “transition Medicare away from a volume-based system toward one that rewards value, ensures the accuracy of payments, and improves the quality of care."

Passage of the bill is not a done deal, however, as hurdles remain. The Senate would need to pass the bill before adjourning for a two-week recess on Friday, and some groups still have reservations. Fiscal conservatives worry about costs and the fact that only approximately $70 billion in funding sources are currently included in the bill, while Democrats would like to see the CHIP program extended for four years.