WASHINGTON, D.C. – After the United States Senate voted today to once-again adopt a temporary, one-year fix of the Medicare Sustainable Growth Rate formula, known as the ‘Doc-Fix’, U.S. Senator Angus King (I-Maine) called for a comprehensive solution to the 12-year old problem by passing the Medicare Drug Savings Act.

“For more than a decade, Congress has failed to find a fix for the Medicare payment system because of ongoing disputes over the best way to pay for it. This year was no different,” Senator King said. “While I am pleased Congress was able to avert what would have amounted to a catastrophic reduction in payments to doctors, I still believe that Democrats and Republicans from both chambers need to put politics aside and do what’s best for the country. It’s time to find solutions. 

“For example, the Medicare Drug Savings Act, which I authored with Senator Rockefeller, would correct excessive payments to drug companies, protect beneficiaries, and generate nearly the exact amount of savings necessary to permanently and comprehensively fix SGR. It’s an obvious and commonsense solution that won’t leave doctors and patients worried every year over whether or not Congress will come together to pass an extension. I continue to urge my colleagues to look at this bill, and I will continue to advocate for a long-term solution when Congress takes up this debate again.”

Medicare payments for services of physicians and certain non-physician practitioners are made on the basis of a fee schedule, commonly referred to as the sustainable growth rate (SGR) system. The SGR formula was originally intended to rein in the growth in Medicare costs by setting some boundaries on physician reimbursement. While the formula was well-intended, rising medical costs ended up triggering unpopular cuts to physicians’ Medicare payments. Year after year, Congress patched the program and postponed these cuts. But now, the cuts have accumulated and, if Congress had not intervened, Medicare payments would have been reduced by 25 percent. If such a large cut were made, it is believed that physicians would leave the Medicare program.

Through a series of patches, Congress has already spent $150 billion on the SGR problem without actually fixing it. The Congressional Budget Office has estimated that the cost of a permanent fix could be nearly $140 billion dollars over ten years, a much lower cost estimate than in past years. It is also less than the amount Congress has spent on consecutive short-term fixes to the problem.

The Medicare Drug Savings Act, which is projected to save taxpayers $141.2 billion over the next ten years, would eliminate a special deal for brand-name drug manufacturers that allows them to charge Medicare higher prices for prescription drugs for some seniors and people with disabilities, including about 97,000 Mainers. The bill would require drug companies to provide rebates to the federal government on drugs used by dual eligibles – people eligible for both Medicare and Medicaid, who are predominantly low-income seniors – just as was done for dual eligibles on Medicaid before Medicare Part D was created in 2006.

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