Understanding the SGR: Analyzing the “Doc Fix”
New Issue Brief examines debate around Medicare physician payments
The federal government had no way of anticipating the phenomenal growth of costs that would be associated with Medicare when it was created in 1965. Medicare currently represents over 15 percent of all federal outlays; by 2020, enrollment is expected to increase to 63.5 million beneficiaries and compose a projected 17.4 percent of all federal outlays.
The Sustainable Growth Rate (SGR) was created to provide access for patients, control federal health spending on Medicare Part B, and distribute costs across different medical specialties. However, federal health care expenditures have continuously grown over their targets in the past decade, rendering the SGR obsolete.
Since 2002, the Medicare Part B payment mechanism has called for reductions to physician reimbursements; however, Congress has consistently implemented methods to override these reductions and has increased physician reimbursement rates annually.
If Congress continues to override SGR-mandated physician fee reductions through 2018, physicians will face a 49 percent reduction in reimbursement rates at that time. Such a drastic cut to physician reimbursements, without implementing mechanisms to decrease health care costs, will result in physicians discontinuing medical services to Medicare beneficiaries.
Understanding the SGR: Analyzing the “Doc Fix,” an Issue Brief from the Deloitte Center for Health Solutions:
- Reviews the historical events leading to the creation of the SGR
- Examines the SGR formula and problems with its use
- Discusses changes recommended by various groups, including MedPAC, the Bowles-Simpson Commission, and the American Medical Association
- Provides cross-sector implications for stakeholders
- Offers Deloitte’s suggestion on the way forward
The SGR is complicated: It is necessary that industry stakeholders understand it fully, and that they consider its modification in the broader context of the industry’s sustainability rather than a narrow context focused exclusively on physician payments.
To read the full Issue Brief, please download the attachment.