Health Law News From Arnold & Porter

Health Law News From Arnold & Porter

February 08, 2013
1 min read

BLOG: Reduced CBO estimate reignites debate over sustainable growth rate repeal

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From international law firm Arnold & Porter LLP comes timely views on current regulatory and legislative topics that weigh on the minds of today’s physicians and health care executives.

On Feb. 5, the Congressional Budget Office (CBO) reduced its estimate of the cost to freeze Medicare payments under the physician fee schedule (PFS) at current levels by more than $100 billion. Medicare spending under the PFS is driven in large part by the sustainable growth rate (SGR) formula. Under the current formula, the CBO projects that Medicare payments to physicians will be reduced by about 25% percent in January 2014 before increasing by small amounts in subsequent years.


The CBO estimated in November 2012 that a 10-year freeze on Medicare payment rates under the PFS would increase program outlays by roughly $244 billion. The CBO’s most recent assessment of this issue in the Budget and Economic Outlook: Fiscal Years 2013 to 2023, however, reduced this estimate to $138 billion. This dramatic reduction prompted calls from a variety of advocacy groups to repeal and replace the SGR with an updated reimbursement formula.

In a statement released on Feb. 5, for example, AMA President Jeremy A. Lazarus, MD, urged lawmakers “to take advantage of the fact that the cost of repealing the SGR is lower than it has been in many years and move promptly to replace the formula with a new system that encourages quality care while reducing costs.”

Additional information:

CBO report

AMA response

Ted Lotchin, JD, MPH, can be reached at Arnold & Porter LLP, 555 12th St. NW, Washington, DC 20004-1206; 202-942-5250; email: