CMS uses the SGR formula to update physician payments. The letter laid out reasons for transitioning the Medicare program from the SGR to a new payment system that would reward physicians who provide high-quality care and generate Medicare savings. Click here to download a copy of the letter.
The SGR was enacted by Congress by 1997 as a way of controlling Medicare spending on physician services. The SGR has scheduled a potential payment reduction every year, but Congress has passed legislation to avert the cuts every year since 2002. This causes a problem because every year the cuts are delayed, the underlying cost of “fixing” the SGR increases.
If Congress does not enact legislation to advert cuts again by Dec. 31, 2012, the current path to “fix” the SGR should expire, triggering a 27 percent cut in physician payments. If the scheduled reduction is not postponed, ASC facility payment rates will be impacted by the physician rate cut, for procedures paid at the physician office payment rate.
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