SGR Update, from SDCMS & CMA

March 25, 2015

Important update on SGR that was provided by San Diego County Medical Society and the CMA –

We applaud the excellent advocacy provided by SDCMS and CMA and urge you to contact your legislators!

Yesterday, the House and Senate reintroduced the bipartisan SGR bill that marries the SGR payment reform policy with the funding sources.  It also extends the Children’s Health Insurance Program (CHIP) for two years at the higher ACA funding levels.  The bill is H.R. 2 “The Medicare And CHIP Reauthorization Act” (MACRA).  Below is a summary of the major provisions:

  • SGR Payment Policy Remains the Same: Repeals the SGR; Provides automatic 0.5% updates each year for 4 years; In 2019 physicians can choose from two payment tracks: 1: Fee-For-Service Track that simplifies and consolidates the quality reporting programs and reinstate large bonuses up to 12% and reduces current penalties; 2: Alternative Payment Model Track that provides 5% bonus payments.  The new payment models and the quality measures are to be developed by physicians.  There is also $125 million in funding assistance for small practice physicians.
  • Extends the expiring CHIP Program for 2 years at the higher ACA funding levels.  It covers nearly 1 million kids in California who would lose their insurance without it. (The Senate Democrats want 4 years and are trying to decide whether to hold up the bill to get 4 years.  The Children’s Groups are supporting the House 2 year version to get the bill passed out of the House but are pushing the Senate to try for 4 years.  The Senate Republicans are resisting because they have already agreed to continue CHIP at the higher ACA funding levels.)
  • Extends the expiring Community Health Center funding. (Hyde amendment language that bans federal funding of abortions has been tied to the Community Health Center appropriations since 1979.  However, the original House language codified the Hyde amendment going forward which drew opposition from the reproductive rights groups.   There is new compromise language that seems to have resolved the issue.  However, it has kept many House and Senate Democrats from supporting the bill thus far.)
  • Extends the important National Health Service Corps and the Teaching Health Center Rural primary care residency programs through 2017.  There are 4 programs in CA.
  • Reverses the CMS decision to eliminate the bundled payments for 10-day and 90-day global surgical service. Also requires CMS to collect data on these services.
  • Makes permanent the Qualifying Individual Medicare program that helps low-income seniors pay for premiums and continues the Transitional Medical Assistance Program for Medicaid.
  • Extends the moratorium on RAC audits of the hospital two-midnight rule which helps hospitals and physicians.
  • Delays the ACA cuts to DSH hospitals for one more year.


  1. The $200+ billion bill will not be fully offset with funding sources.  The SGR repeal piece will not be offset. 
    • For 12 years, Congress has stopped the SGR payment cuts so the SGR never takes effect.  Therefore, the SGR savings to the federal govt are phony.  Speaker Boehner and Leader Pelosi have rightly concluded that Congress does not need to “pay for” a phony cost.  The Wall Street Journal and the Americans For Tax Reform (Grover Norquist) agree.  However, this provision is being opposed by the Heritage Action Network and they are asking Republicans to oppose the bill because it is not fully paid for.
  2. The remaining $70 billion will come from the following:
    • New deductibles for MediGap policies starting in 2020.
    • Increased premiums for the 2% of very high income Medicare beneficiaries: 15% more for couples making $267-320,000 and 20% more for couples making more than $320,000 in retirement income.
    • ~$35 billion in payment cuts to hospitals and others providing post-acute care services.   This does not apply to physicians.


  • Because of the opposition from conservative groups around the funding offsets, we need physicians to continue to work the Republican Members and tell them this bill is fiscally responsible.
  • Because of the confusion related to the abortion language and the controversy over extending CHIP for 2 years vs. 4 years and some light pressure from AARP, most of the California  Democrats have yet to commit to vote for the bill.  Most Members of the California delegation are leaning yes but we need to push them securely into the YES column. We need a big vote in the House.