On June 15, 2009, the House Ways and Means Committee posted a press release outlining Medicare physician fee schedule reforms being developed by key House lawmakers. Under current law, known as the sustainable growth rate (SGR) formula, Medicare physician payments are expected to be reduced by 21% in 2010 and by additional amounts in future years. Under the plan being developed in the House, the SGR formula would replaced with a new formula that:

  • Removes items such as drugs and laboratory services not paid directly to practitioners from spending targets;
  • Allows the volume of most services to grow at the rate of GDP plus 1 percentage point per year;
  • Allows the volume of primary and preventive care services to grow at GDP plus 2% per year; and
  • Encourages new Accountable Care Organizations "to be responsible for their own growth paths, irrespective of reductions or increases that apply elsewhere in the system."

The press release touts the reforms as costing "less than $300 billion over ten years."