New Medicare Payment Formula Legislation Has Positive Side Effects for PAs

The new bill will permanently repeal and replace the Sustainable Growth Rate (SGR) formula, preventing a 21 percent cut in payment to physicians and eliminating the need for further “doc fixes.” Instead it will create a merit-based payment system that ties reimbursement to performance.

The legislation also includes several pro-PA provisions:

  • PAs will be treated the same as physicians and nurse practitioners.
  • Bill gives PAs the ability to conduct in-person encounters necessary to provide durable medical equipment (DME) to Medicare patients.
  • Acknowledges the role that PAs play in providing complex chronic care to patients.

The SGR, a reimbursement formula for physicians enacted as part of the Balanced Budget Act of 1997, was designed to control spending on Medicare. The formula set annual spending targets that relied on a variety of factors, but by 2002, spending far exceeded the targets leading to a reduction in physician payments in the Medicare program. As a result, since 2003, Congress has passed more than 17 doc fixes to avoid severe payment cuts and raise physician reimbursements. The bill, known as The Medicare Access and CHIP Reauthorization Act of 2015, will provide annual increases of 0.5% to the current reimbursement rates over the next five years.

This bill also extends funding through fiscal 2017 for the Children’s Health Insurance Program (CHIP), the Teaching Health Center Graduate Medical Education Program (THCGME), community health centers, and the National Health Service Corps (NHSC). The NHSC provides funding for scholarships for students and loan repayment for primary care providers — including PAs. This funding helps address the primary care provider shortage by ensuring that PA students and graduates are able to provide primary care services in underserved areas at a time of critical need for America’s patients.

For more information, feel free to contact Tony Miller,, or myself, Athena Abdullah,