Extension of the Sustainable Growth Rate Formula Would Freeze Medicare Payments to Physicians for Two Years

On February 14, 2011, President Obama’s administration released a proposed budget for the 2012 fiscal year that provides for a two-year extension of the sustainable growth rate formula. The proposed budget calls for canceling Medicare reimbursement cuts for physicians for two years and freezing payments during that time. The budget document does state that “the Administration is committed to working with the Congress to achieve permanent, fiscally responsible reform;” however, it provides payment offsets for only the first two years at a cost of approximately $62 billion. According to the Department of Health and Human Services, the cost of a 10-year fix is about $370 billion.

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