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The Problem with the Sustainable Growth Rate

By Dr. Linda Burke-Galloway
. 1 Comment(s)

I’m sitting at my computer shaking my head and wondering what will it take for the profession of medicine to return to “normal?” When I graduated from medical school two decades ago, I had no idea that I would need a course in economics and an MBA to practice medicine. Instead of taking continuing medical education courses regarding clinical care, physicians must now be able to speak in the vernacular of medical loss ratio, market share, sustainable growth rates, ICD and CPT codes. As the end of the year approaches, physicians wait with bated breath to determine the fate of Medicare. Why? Because the Sustainable Growth Rate (SGR) formula is embedded in the payroll tax cut and unemployment extension bill that was passed by the Senate but blocked by the House. The SGR is a formula used by Medicare to determine how much physicians should be paid and was enacted as part of the 1997 Balanced Budget Act. Oh, what a misnomer. Our present domestic budget is anything but balanced. Is the SGR fundamentally flawed? Yes, because it attempts to limit Medicare payment rates for physicians without limiting growth or the complexity of their services, according to a Senior Fellow at the Center on Budget and Policy Priorities.

Without the passage of the payroll tax cut bill, physicians will brace themselves for a 27% payment cut that will have a ripple effect on patient care. It is anticipated that if Senate and the House can't come to an agreement before January 1st, the process of physician reimbursements will be from 10 days to one month. The Medicare Payment Advisory Commission (MedPAC) gives the following opinion: the SGR formula “does not provide incentives for individual physicians to control volume growth, and is inequitable to those physicians who do not increase volume unnecessarily. And it continues to call for substantial negative updates through at least 2016. Such reductions in physician payment rates, if they take place, would threaten beneficiaries’ access to physician services.

How can physicians continue to practice medicine in this type of milieu? Where is the voice of reason?

Target words: Sustainable Growth Rate, Doctors For America, Medicare, Payroll Tax Cut bill, 1997 Balanced Budget Act, Dr. Linda Burke Galloway

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  1. Lee Stanfield

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    All these problems would be addressed by simply passing a universal single payer (Medicare For All) health care system, which would automatically save us over $400 Billion/Yr, while covering every individual fully... including vision, hearing, dental, prescriptions, podiatry, & pregnancy,in addition to everything now covered by insurances.

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