The American Medical Association reports the Congressional Budget Office (CBO) recently released a new budget including calculations that serve as the "baseline" that CBO and Congress use when evaluating the cost of a particular piece of legislation. The budget document includes a report of discussions regarding Medicare physician payments and the Sustainable Growth Rate (SGR).

With regard to the SGR, CBO states that:

(1) Repeal of the SGR and replacing it with the Medicare Economic Index (MEI) updates would cost an estimated $65 billion over five years.

(2) Barring congressional intervention by 2017, physician payment rates will be less than 75 percent of what they are in 2007.

These statements indicate the CBO assumptions regarding actual versus target spending under the SGR formula are actually worse. In the budget report, CBO also restated that under current law, Medicare 2008 payment rates for physicians will be reduced by an estimated 10 percent.