CBO lowers projected SGR costs

The Congressional Budget Office (CBO) lowered its estimate of the cost of holding physician fees constant under the Medicare sustainable growth rate (SGR) formula.

In its Budget and Economic Outlook Fiscal Years 2013 to 2023 report, the CBO wrote that actual spending for physician services has been lower than projected for the past three years, placing it below spending targets in the SGR.

“Because actual spending has been lower than spending targets, CBO now estimates that payment rates will increase beginning in 2015,” according to the report. “Those higher payment rates narrow the difference between growth under current law and a freeze at current levels, thereby reducing the estimated cost of restricting the payment rates.”

The CBO estimated that holding payment rates through 2023 at the levels they are now would raise outlays for Medicare by $14 billion in 2014 and about $138 billion between 2014 and 2023.

The SGR is used to calculate Medicare Physician Fee Schedule payments. In January, Congress passed legislation that delayed implementation of a 26.5 percent cut in Medicare physician payments until the end of 2013. If lawmakers do not intervene again, physicians’ fees will be reduced by about 25 percent in January 2014 and will increase by small amounts in subsequent years, CBO projects. Lawmakers have overridden those scheduled reductions every year since 2003.

The February report is available here.