Senate Turns Down Effort to Repeal Medicare Payment Formula

Janice Simmons, for HealthLeaders Media , October 21, 2009

In a 53-47 vote on Wednesday afternoon, the Senate turned down efforts to repeal the sustainable growth rate (SGR) formula that is now used to establish annual Medicare physician payment updates. Forty Republicans and 13 Democrats voted against the motion.

Under the bill (S. 1776) proposed last week by Sen. Debbie Stabenow (D-MI), Congress would override the formula it set in 1997 to prevent Medicare costs from rising faster than planned. The formula had called for cutting projected Medicare reimbursements to physicians; however, those cuts were reversed each year. The bill, which would have cost $247 billion, is separate from the current healthcare reform bills which are now being reconciled in the Senate.

The bill, which had received support from the American Medical Association, AARP, and the Military Officers Association of America, failed to gain the support of moderate Democrats such as Senators Kent Conrad (D ND) and Evan Bayh (D-IN) because they said the bill failed to raise revenue to offset its costs.

Republicans had argued, though, that the bill was trying to avoid adding higher costs to the current healthcare legislation. Senate Minority Leader Mitch McConnell (R-KY) said today that, "In the Senate's first vote on healthcare spending this year, a bipartisan majority rejected the Democrat Leadership's attempt to add another quarter trillion dollars to the national credit card without any plan to pay for it."

The AMA said in a statement that it was "deeply disappointed" over the vote. "Permanent repeal of the Medicare physician payment formula is essential to comprehensive health system reform," it said.

In an interview with HealthLeaders Media this week, AMA President J. James Rohack, MD, said that abolishing the current formula would have allowed Congress to develop a new payment system that rewards efforts to treat and control chronic diseases, and reduce hospitalization. "This formula is designed to make cuts as volumes go up. It's an old formula that doesn't reflect what 21st century medicine is and will become even more in the future," he said

The American College of Physicians said that it will continue to insist that Congress repeal the "unworkable and destabilizing Medicare SGR and create a better system for updating physician services." It said that "the practice of enacting short term patches that fail to provide the stability needed to initiate comprehensive physician payment reform ... will not be reduced by devastating physician payment cuts."

Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at

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