Medicare Sustainable Growth Rate

The Medicare Sustainable Growth Rate (SGR) was a method used by the Centers for Medicare and Medicaid Services (CMS) in the United States to control spending by Medicare on physician services.[1]

President Barack Obama signed a bill into law on April 16, 2015, the Medicare Access and CHIP Reauthorization Act of 2015, which ended use of the SGR.[2] The measure went into effect in July 2015.[3]

Enacted by the Balanced Budget Act of 1997 to amend Section 1848(f) of the Social Security Act, the SGR replaced the Medicare Volume Performance Standard (MVPS), which was the previous method that CMS used in an attempt to control costs.[4] Generally, this was a method to ensure that the yearly increase in the expense per Medicare beneficiary did not exceed the growth in GDP.[5] Every year, the CMS sent a report to the Medicare Payment Advisory Commission, which advised the U.S. Congress on the previous year's total expenditures and the target expenditures. The report also included a conversion factor that would change the payments for physician services for the next year in order to match the target SGR. If the expenditures for the previous year exceeded the target expenditures, then the conversion factor would decrease payments for the next year. If the expenditures were less than expected, the conversion factor would increase the payments to physicians for the next year. On March 1 of each year, the physician fee schedule was updated accordingly. The implementation of the physician fee schedule update to meet the target SGR could be suspended or adjusted by Congress, as was done regularly (this was referred to as a doc fix). The repeated task of implementing a "doc fix" led to the permanent repeal of the SGR, or "permanent doc fix," in 2015.[6]

  1. ^ "Sustainable Growth Rates & Conversion Factors". Centers for Medicare and Medicaid Services. Retrieved March 2, 2010.
  2. ^ "Obama signs bill fixing Medicare doctors' pay". reuters.com. Reuters. 16 April 2015.
  3. ^ "Senate Passes Historic SGR Repeal Bill By Vote of 92-8". medpagetoday.com. 14 April 2015.
  4. ^ "Sustainable Growth Rates & Conversion Factors" (PDF). Centers for Medicare and Medicaid Services. Retrieved March 2, 2010.
  5. ^ Jacob Goldstein (July 10, 2008). "Why Medicare Pay Cuts for Doctors Will Be Back". Wall Street Journal Health Blog.
  6. ^ Ezra Klein (June 26, 2010). "What to do about the doc fix?". The Washington Post. Archived from the original on October 9, 2012. Retrieved July 27, 2011.