Texas Tech University Health Sciences Center
Taking a Look at the Sustainable Growth Rate

Taking a Look at the Sustainable Growth Rate

ceo_minuteCongress is currently trying to correct the long-standing problem with the Sustainable Growth Rate (SGR) formula and is in process of streamlining several federal initiatives in which Texas Tech Physicians is a participant. If they are successful, this would be of great interest to us, and we are supposed to learn the outcome this week. To refresh your memory, the SGR is a formula that determines physician payment for Medicare B patients. Congress enacted it as part of the Balanced Budget Act of 1997 during the Clinton Administration. Basically, it is supposed to limit growth in spending for physicians’ services by linking updates to target rates of spending growth. When spending increases exceed the targeted rate of growth, payments are automatically reduced across the board. That’s very concerning to all providers. Another thing to know about these temporary annual fixes is that they are refactored into the SGR. So, each time a pay cut is postponed, it is factored into the future Medicare budget. In other words, when Congress kicks the can down the road it just creates more problems with a cumulative effect.

However, every year since 2001, the SGR formula has threatened to impose steep cuts in the Medicare physician fee schedule, but Congress has passed legislation to avoid the cuts each time. Still, the annual drama does create a lot of angst for the medical community.

Here is what caught my eye: the proposed law rolls together three existing quality-incentive programs, including the electronic health record incentive program, the Physician Quality Reporting System and the value-based payment system established under the Affordable Care Act. The new incentives would range from a 4 percent maximum penalty or bonus in 2019 to a 9 percent maximum penalty or bonus in 2022 and beyond. The new system would replace the existing penalties or bonuses under the government’s electronic health record incentive program. Providers now face a 3 percent penalty starting in 2017, which rises to 5 percent in 2019 and beyond.

So, we will see how it works out this week. Never a dull moment!