Sustainable Growth Rate

Medicare’s Sustainable Growth Rate (SGR) is a complex and flawed formula that attempts to contain spending for Medicare’s physician services by setting a total target amount of spending for particular goods and services offered under Medicare Part B. The fee schedules are modified annually either upward or downward to reflect the differences in real spending and the overall spending target. However, spending as measured by the SGR method has steadily been above the targets set by the formula, which under current law, reduces payment rates for Medicare’s physician services. For several years this flawed SGR formula has led to substantial cuts in the Medicare Physician Fee Schedule, which have been averted only after last-minute Congressional action and considerable physician lobbying efforts.

The Medical Society of Virginia (MSV) advocates for a permanent solution to the SGR so that physicians may be fairly reimbursed for the services they provide to Medicare patients. Revising the SGR has been receiving significant attention and has been considered in conjunction with the national health care reform debate. MSV partners with other physician groups so that interested parties can work on a long-term solution and find a permanent fix and replace SGR with a formula that better reflects the cost of treatment.

Resources

Medicare payment action kit (ama-assn.org)

The Sustainable Growth Rate formula for setting Medicare’s physician payment rates (cbo.gov)