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Unsustainable growth rate: physician perspective

Todd Dorman1

  • 1Department of Anesthesiology/Critical Care Medicine, School of Nursing, Johns Hopkins University School of Medicine, Baltimore, MD, USA.

Critical Care Medicine
|February 16, 2006
PubMed

Insights

The sustainable growth rate (SGR) was designed to control healthcare costs but is now reducing physician payments. Its flawed calculation and inclusion of drug costs make the SGR unsustainable.

Area of Science:

  • Healthcare economics
  • Physician payment models

Background:

  • The Sustainable Growth Rate (SGR) was implemented to manage healthcare expenditure growth.
  • Current SGR mechanisms contribute to reduced physician payments.
  • Key flaws include the inability to correct past assumptions and the inclusion of drug costs.

Purpose of the Study:

  • To detail the history and calculation of the SGR.
  • To explain why the current SGR model is unsustainable.
  • To discuss potential remedies and their impact on physicians and Medicare premiums.

Main Methods:

  • Historical analysis of SGR policy.
  • Examination of SGR calculation components.
  • Review of proposed SGR reformulations.

Main Results:

  • The SGR's design flaws lead to unintended reductions in physician reimbursement.
  • The formula's rigidity prevents adjustments for inaccurate historical data.
  • Drug costs, when included, distort the SGR's intended function.

Conclusions:

  • Physicians often lack a clear understanding of the SGR's impact on their payment.
  • The SGR is a significant factor in determining physician payment conversion factors.
  • Revising the SGR is crucial to ensure fair physician compensation and manage Medicare costs.
Abstract

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