The Medicare Sustainable Growth Rate formula (SGR), passed by Congress in 1997, was intended to help control Medicare spending on physician services by limiting the yearly increases in the expense per Medicare beneficiary to the growth rate in GDP. However, the payment reductions prescribed by this SGR formula were so severe, that since 2003, Congress has repeatedly delayed the cumulative cuts on the basis that they would have unacceptably jeopardized beneficiary access to Medicare.
In late 2013, a bipartisan agreement for a permanent “SGR fix” was reached between the House and Senate. On March 14, 2014, the House passed H.R. 4015, the SGR Repeal and Medicare Provider Payment Modernization Act of 2014, that would replace the SGR formula with a new provider payment system. H.R. 4015 was estimated to increase spending by approximately $138 billion over ten years. The bill did not pass primarily on the inability to agree on how to address the costs. Medicare SGR dictated a reimbursement rate reduction of 24 percent to become effective April 1, 2014, and thus, the House and Senate again delayed SGR cuts through March 31, 2015, by passing H.R. 4302, the Protecting Access to Medicare Act of 2014.
On March 26, 2015, the House passed essentially the same compromise scheme in H.R. 2 by a wide margin of 392-37, and the Senate voted April 14th by a margin of 92-8 to permanently repeal the sustainable growth rate (SGR) formula, and the President signed the bill on April 16th.