Time To Put The Sgr To Rest — For Good


It’s no secret that Medicare faces serious challenges.

One of the most significant problems we must address is how to reconcile a rising number of beneficiaries with a shrinking number of doctors to treat them. The numbers are concerning: while the United States will have a projected shortage of up to 160,000 physicians by 2025, Medicare faces a huge enrollment increase, growing from 48 million beneficiaries today to nearly 80 million by 2030. It is an astounding expansion that will lead to greatly increased costs for patients, doctors, and taxpayers alike.

This challenge is difficult enough on its own, but Congress also created an additional headache for Medicare physicians and their patients in 1997 in the form of the so-called “sustainable growth rate” (SGR), a formula designed to artificially control Medicare spending on physician services.

Over the past decade, the SGR formula has called for an annual cut in reimbursement payments for doctors who treat seniors covered by Medicare. Given the significant consequences these cuts have for Medicare beneficiaries, however, Congress has stepped in almost every year to override them — yet, it did so without actually repealing the underlying SGR law


The fact that the SGR law stayed on the books has resulted in an ever-growing theoretical debt — the difference between what SGR said doctors would be paid versus what they were actually paid. Indeed, this year alone, the SGR formula called for an astounding 30 percent reduction in what physicians would be paid for providing care to Medicare beneficiaries. Thankfully, Congress intervened in time to keep that cut from going into effect.

Clearly, though, we cannot go on like this. Both parties agree that the SGR formula is broken, so there is no sense in allowing these required cuts to keep threatening the health of our nation’s seniors. We need a permanent solution.

I have been working hard with my colleagues to develop just such a solution, and I recently proposed a compromise plan that has already garnered support among members of both the Senate and the House. At its core, this new, permanent plan would do two things.

First, it would wipe out the $200 billion in so-called “bad debt” that has accumulated over the years. This debt is not real — it’s just the difference between what Congress thought it could save versus what it could actually save — and it is the exact sort of Washington smoke-and-mirror accounting that Americans are tired of, and that should be eliminated from our books. As such, the first part of my proposal removes that bad debt. The second part of my plan identifies real savings in the health care budget in order to actually pay for the $100 billion or so that Medicare will have to spend on physician services over the next decade.

This plan, should it be taken up in the weeks ahead, would be the closest Congress has come in recent years to considering any serious proposal to repeal and reform the SGR formula.

Unfortunately, negotiations to move this proposal forward have hit a snag. Some of my Democrat colleagues in the Senate have fiercely resisted the second part of the plan — namely, actually paying for it. It is unfortunate, because our seniors who depend on Medicare are the ones who will be hurt if we fail to solve this problem; that is, if more and more doctors stop seeing Medicare patients because they’re not paid enough to do so. More and more seniors have written to tell me about doctors who can no longer see them because of our broken SGR system.

For the sake of our seniors, we simply must get beyond partisan games that preclude cutting a single penny in spending — even to ensure that Medicare beneficiaries will be able to have access to physician services.

Congress will eventually have to revisit the SGR discussion again, so I will continue to work with members of both parties to come to a solution that can pass. The time for Washington budget gimmicks is over. We need a permanent solution that works for Arizona seniors who depend on Medicare physician services; they are counting on us to act.

Sen. Jon Kyl is the Senate Republican Whip and serves on the Senate Finance and Judiciary committees. Visit his Web site at www.kyl.senate.gov or his YouTube channel at www.youtube.com/senjonkyl.


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