The Congressional Budget Office (CBO) estimated that the House Ways and Means Committee’s bill (HR 2810) to repeal and replace Medicare’s sustainable growth rate (SGR) formula would cost $121.1 billion over 10 years. According to CBO, the estimate makes the House Ways and Means proposal less costly than the House Energy and Commerce Committee or Senate Finance Committee proposals. The three committees are working to hammer out the differences in their respective bills and produce a permanent repeal before the SGR fix expires on March 31. If lawmakers cannot come to an agreement, physicians face a 24% cut to Medicare reimbursement rates.
CBO said the House Ways and Means version was the least costly because it includes lower annual updates to physicians’ payment rates and lower overall costs associated with its Alternative Payment Model Program (APM). According to CBO, nearly all the costs associated with the Ways and Means bill come from its payment increases to physicians. The measure would increase Medicare reimbursement rates by 0.5% in 2015 and 2016, and then reimbursement rates would remain stable through 2023. CBO estimates indicated that the updates would increase spending by $118.4 billion between 2014 and 2023. In addition, establishing a value-based performance incentive program and an APM program would increase spending by $5.5 billion through 2023.
However, CBO also estimated that HR 2810 would save $2.8 billion over 10 years through its requirement that Medicare payment codes be developed to encourage care coordination and medical-home use.