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New Congress aims to repeal Medicare reimbursement cuts

by Carol Ko, Staff Writer | January 24, 2013
Congressman Kevin Brady
plans to make SGR formula repeal a priority
As politicians spar to get the burgeoning federal deficit under control, the newly appointed leader of a key congressional health subcommittee may fight to repeal dramatic Medicare payment slashes that total nearly 27 percent.

The U.S. House of Representatives has tapped Congressman Kevin Brady (R-Texas) to chair the Health Subcommittee for the 113th Congress. In a news release, Brady wrote that he intended to work with the House Energy and Commerce Committee to "unveil legislation permanently repealing Medicare's sustainable growth rate formula and replacing it with a reliable physician reimbursement formula that rewards quality."

The sustainable growth rate (SGR) formula, which controls Medicare reimbursement payments to physicians, was originally devised by Congress in 1997 to ensure that health care spending tracked with the growth of the overall economy.

What seemed like a good plan at the time has become a perennial headache for both sides of the aisle. When health care spending began to exceed the overall growth of the economy in 2001, the rules of the formula mandated reimbursement cuts for doctors. However, in the end politicians were reluctant to follow through, fearing that if doctors dropped patients in response, large voting blocs would lay the blame on Congress.

Under the formula the size of the cuts has increased each year it's been delayed. Though many medical professionals were hoping the formula would be repealed under new health reform, two separate attempts to eliminate SGR — both in the initial health care reform bill and in a separate bill passed later — failed to get votes.

Congress included a provision in its fiscal cliff deal that some have dubbed a "doc fix" to delay the SGR cuts for another year. Many critics of the formula, including the American Medical Association, allege that the cuts would be a catastrophic blow to the health care industry, forcing doctors to turn away new Medicare patients and ultimately jeopardizing hospitals' ability to care for seniors.

The SGR repeal is one of many proposed Medicare reforms that many politicians have been reluctant to address. In a fiery inauguration speech Monday, President Obama defended programs such as Medicaid and Medicare, arguing that they made the country a "source of hope for the poor, the sick."

However, as Republicans seek to curb government spending, some politicians are proposing radical changes to the programs, including raising the Medicare eligibility age and forcing wealthy beneficiaries to pay higher premiums.

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