Analysis of the Proposed Medicare Physician Payment Innovation Act of 2012

Modifying the Approach to SGR Payments

Effectively stopping sustainable growth rate (SGR) payments by inserting the endpoint year of 2012 in subsection (d) Section 1848 of the Social Security Act would essentially repeal SGR legislation and end further updates of physician reimbursements.[1] [2] This goal would obviate the need for an annual “doc fix” by congress to prevent substantial reductions to physician reimbursements. Ending the legislation is ideal for nearly all interest groups involved. Legislators from both parties would be free to focus on more pressing matters during an already busy time of year in the months of November through February. In a typical year, some of these activities include completing congressional business prior to the winter break, prioritizing committee and office business for the first few months of the new calendar year, and creating and modifying political party agendas. The latter usually involves attendance at annual Democratic and Republican retreats in January of each year. Lawmakers from both parties in both houses must determine if changes are desired in party leadership, and intra-party votes to effect such change must be taken, if deemed necessary. Party leadership must make decisions regarding the composition and membership of key committees in the House and the Senate. A Presidential and/or congressional election year results in potential office and committee budget adjustments and staffing revisions, especially during the power shift that occurs if the opposing party wins the majority.[3]

The timing for SGR negotiations could probably not be more inopportune, especially this year. For instance, the 2013 update of a physician cut for reimbursements by 26.5% is slated to occur on January 1, 2013.[4] However, resolution of the current fiscal cliff crisis by January 2, 2013, is of the utmost importance. Since only a few days remain in the current legislative session, neither a satisfactory bi-partisan nor bi-cameral outcome has been achieved. Resultant sequestration is the undesired outcome, which evolved from a failure of a bi-partisan, bicameral super-committee charged with reducing the federal budget deficit in 2011.[5] Legislative provisions required by the Balanced Budget and Emergency Deficit Control Act of 1985 (colloquially known as the Gramm-Rudman-Hollings Deficit Reduction Act of 1985), which initially proposed the concept of sequestration, mandate sweeping budget cuts that will result in $1.5 trillion in budget cuts annually across all federal spending programs until the year 2021 unless exempted by other legislation. [6] [7] [8] The Medicare and Medicaid programs are among numerous programs susceptible to budget cuts. House Democrats and Republicans currently see cutting Medicare as a viable option, although it is not certain that this is an option that will be exercised. However, Republicans are far more willing to reduce funding for Medicaid programs than Democrats.[9] Otherwise, a couple of notable exemptions to the Gramm-Rudman-Hollings Deficit Reduction Act of 1985 include social security benefits and Internal Revenue Service collections programs.[10] Consequently, the fate of the SGR must likely wait until fiscal cliff legislation has been passed.

Dorkina Myrick, MD, PhD, is a physician-scientist and pathologist trained at the National Institutes of Health. Dr. Myrick also previously served as a Health Policy Advisor in the United States Senate and the United States House of Representatives.



[1] Schwartz, Allyson Y. (PA-13). “H.R. 5707-Medicare Physician Payment Innovation Act of 2012.” Bill Summary and Status, All Information. 112th Congress (2011-2012).   Thomas. 9 May 2012. Web. 19 October 2012.

[2] “Social Security Act.” Section 1848 [42 U.S.C. 1395w–4]. Social Security Online Website. Web. 12 December 2012.

[3] Oleszek, Walter J. “Preliminary Legislative Action.” Congressional Procedures and the Policy Process. 110-111. 8th edition. Print.

[4] “Medicare’s Payments to Physicians: The Budgetary Impact of Alternative Policies Relative to CBO’s March 2012 Baseline.” Congressional Budget Office. Print. 30 July 2012. (Updated 1 November 2012). Web. 9 December 2012.

[5] Mulvey, J; Hahn, J. “Medicare Physician Payment and the Sustainable Growth Rate (SGR) System.” Congressional Research Service. 2 August 2012. 1-21. Print. Web. 21 November 2012.

[6] Id.

[7] ” Title II—Balanced Budget and Emergency Deficit Control Act of 1985.” Public Law 99-177 (99 Statute 1037). 12 December 1985. Social Security Online Website. 12 December 2012.

[8] “2 USC § 905 – Exempt Programs And Activities.” United States Code 2010 Edition. Print. U.S. Government Printing Office Website. Web. 12 December 2012.

[9] “Medicare SGR Payment Cut Looms as January 1 Deadline Approaches.”California Medical Association. 3 December 2012. Web. 8 December 2012.  january-10.

[10] “2 USC § 905 – Exempt Programs And Activities.” United States Code 2010 Edition. Print. U.S. Government Printing Office Website. Web. 12 December 2012.





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