Capitol
Issue Background

Sustainable Growth Rate (SGR)

Repealing the SGR


The AAOS strongly supports the bipartisan bicameral SGR repeal-and-replace plan agreed to by both House and Senate committees and included in legislation introduced by Representative Burgess, Senator Wyden and Senator Hatch in the 113th Congress. AAOS implores Congress to continue the bipartisan progress already made and resolve any outstanding issues in a way that would see this legislation enacted before the current patch expires on April 1, 2015. Working in a bipartisan manner is the only solution to finally take the SGR off the table and move forward with real reform to the physician payment and delivery system.

Medicare’s flawed Sustainable Growth Rate (SGR) formula, enacted in the 1997 Balanced Budget Act, has resulted in payments to physicians that have failed to keep pace with increases in practice costs. As costs continue to rise, while reimbursement declines, further cuts in payments to physicians will threaten patients’ access to quality care.

Congress has continually passed short-term “fixes” that subject patients and doctors to uncertainty each year and create an ever larger debt to be paid back with steeper and steeper future cuts.

The AAOS believes enacting a permanent fix to Medicare’s flawed Sustainable Growth Rate (SGR) formula should be a priority for Congress. The repeal and the replacement of the current formula is vital to ensuring Medicare’s sustainability.

On February 6th 2014, both the House and the Senate introduced the SGR Repeal and Medicare Provider Payment Modernization Act of 2014 (H.R. 4015/S. 2000), which was the result of 18 months of bipartisan bicameral discussion that included significant input from the medical specialty societies, including AAOS. 

This legislation replaces the SGR formula with a more equitable payment system that provides financial incentives that reward higher quality care based on appropriately risk-adjusted, patient-centered measures of health outcomes. It included the following features that are strongly supported by AAOS:

  • A complete repeal of the flawed Sustainable Growth Rate
  • A five-year period of payment stability with positive updates so specialty societies can create new quality metrics and test alternative payment models
  • Quality metrics that are based on threshold measurements that are widely estab-lished and well-known by all participants
  • Physician led efforts to create additional quality metrics and alternative payment models
  • Rule of construction regarding Standards of Care

Unfortunately, political realities stalled final passage of this legislation, and it was unable to garner enough support to become law during the 113th.  AAOS will continue to push a permanent solution to the SGR during the 114th Congress.

For more information, including AAOS press releases and articles on the SGR issue, click here.