However, policymakers face growing pressure to repeal and replace the flawed payment formula, giving physicians permanent relief from looming pay cuts.
1. The Balanced Budget Act of 1997 amended the Social Security Act to create the SGR formula, which was meant to control growth in Medicare spending for physicians’ services, according to CMS. The formula takes into account the estimated percentage change in fees for physicians’ services, the estimated percentage change in expenditures due to changes in laws or regulations, the change in the average number of Medicare fee-for-service beneficiaries and the estimated 10-year average annual percentage change in real gross domestic product per capita.
2. The Medicare Payment Advisory Commission has informed Congress the SGR is “fundamentally flawed and is creating instability in the Medicare program for providers and beneficiaries.” The formula’s methodology of tying annual payment increases to cumulative expenditures has encouraged providers to administer higher volumes of services and has disproportionately burdened those in specialties with little ability to provide higher volumes of care, according to MedPAC.
Read the full article on Becker’s Hospital Review.
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