The U.S. Senate has an opportunity next week to hammer the final nail in the coffin of the failed “sustainable growth rate” (SGR) formula for Medicare physician payment. At the same time, it can move the U.S. closer to a system that pays doctors for the quality of care they deliver, not the quantity.
Bear in mind that Medicare pays about a third of the tab each year for all physician services in the U.S.
For those who have not been following this issue (and I don’t blame you, it’s convoluted, even tortuous), here’s a quick recap:
The House in a rare bipartisan vote (392-37) voted on Thursday, March 26 to repeal the SGR formula, which has been in place since 1998. The formula, part of the Balanced Budget Act of 1997, was intended to constrain Medicare spending by pegging annual physician fee updates to a target based on the growth in overall physician spending and the gross domestic product.
The formula never worked. I’ll spare you the details on that. Suffice is to say that the disparities between the growth in physician costs and GDP over the period 2002-2013 were such that reducing physician fees each year by the amount the formula dictated were—well, let’s just say they were very politically distasteful. Continue reading…