Oplinc|Best Practice Review – Volume 10, Issues 2

Congress Comes together to replace the SGR Formula

The Sustainable Growth Rate (SGR) formula was implemented to limit the growth in Medicare expenditures on physician services. Under the SGR, physician payments were determined through a formula that linked Medicare spending to economic growth. For the first few years the SGR formula did work as intended. The problem began more than a decade ago when health care costs began rising more than the growth of the economy thus triggering continual automatic cuts in the physician payment were Congress not to intervene. Congress acknowledged that the SGR formula was flawed and has acted to temporarily stop the automatic cuts every year since 2003, these temporary fixes only postponed the SGR cuts which were growing each year.

In this issue, we will discuss the legislation that replaced the SGR with a new physician payment methodology.

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