House Budget Resolution Pave Way for Permanent Medicare Fix

  • The House version of the FY 2010 Congressional Budget Resolution contains  provisions that will facilitate replacement of the fatally flawed Sustainable Growth Rate (SGR) formula with a new incentive based Medicare physician payment system.


    • The current CBO baseline is unrealistic.  It assumes that Medicare payments to physicians will be cut by 21 percent in 2010 and by 40 percent over the next decade, creating an artificial, but insurmountable cost to permanently eliminating the SGR.  Congress has ignored the CBO baseline by interceding 6 times since 2003 to temporarily stop Medicare physician payment cuts.  Members of Congress, on a bipartisan and bicameral basis, have stated support for eliminating the SGR.


  • The House Budget resolution would provide budgetary and procedural protection to legislation that would permanently replace the SGR.
    • It would immunize from 5 and 10-year budget points of order legislation that would have the budgetary effect of maintaining current physician payment rates (freeze current physician payment rates).
      • CBO scored the cost of freezing Medicare physician payments at $87 billion over 5 years and $285 billion over 10 years.
      • The Budget Resolution does not intend or propose that Medicare physician payment rates be frozen.  Rather, it allows Medicare physician payment reform legislation to be scored against a baseline that reflects current policy – which means a baseline that assumes the payment rates in effect for physicians for 2009  will stay in effect through 2019.
    • Consequently, subsequent legislation that replaces the SGR with a new more sustainable payment methodology would be much less expensive since $285 billion in offsetting cuts would not need to be made before a new system is enacted.


  • These provisions in the House Budget Resolution are consistent with and have the same effect as the “rebasing” proposal that was included in the President’s FY 2010 budget.
    • The Administration’s Budget included funds in it to account for “expected Medicare payments to physicians.”
    • It assumed a more realistic baseline in accordance with its “best estimate of what the Congress has done in recent years.”


  • The AMA is committed to working with Congressional committees to design a new Medicare physician payment system that promotes delivery reforms, including increasing efficiency and improving the quality of care for all patients.


  • This is the first time that a Congressional Budget Resolution has fiscally accounted for the need to eliminate the SGR.  If the Medicare payment provisions in the House version of the Budget Resolution are not included in the final version of the Budget Resolution, it would be virtually impossible, due to the immense cost, to replace the SGR with a new payment system and pursue other important heath care delivery system reforms this year.

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