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Physician Payment and the Sustainable Growth Rate (SGR)

Established in the Balanced Budget Act of 1997, the Sustainable Growth Rate (SGR) is a formula designed to provide predictable control for federal spending in Medicare by providing yearly updates to the Medicare physician reimbursement rates. By adjusting the payment rates, the SGR was supposed to help control the cost of healthcare by linking it more closely with national growth and changes in the Medicare-eligible population.

Since 2002, the SGR has recommended negative updates to physician payment rates, meaning that actual expenditures have outstripped target expenditures. However, since 2003, Congress has acted to override the formula update, adding cumulatively to the difference between the target and actual expenditures for each subsequent year.

What Can Hospitalists Do?

  • Get involved. Contact Congress and encourage them to repeal the SGR.
  • Stay informed. Congress and federal agencies are often discussing and working on Medicare payments systems and the federal budget.
  • Join the conversation. Visit the Advocacy and Public Policy community on the Society of Hospital Medicine's (SHM’s) Hospital Medicine Exchange (HMX).

What is the Society of Hospital Medicine (SHM) Doing?

  • Gave feedback to the Senate Finance Committee and the House Ways & Means Committee on their SGR Repeal Framework.
  • Partnering with Rep. Allyson Schwartz (D-PA-13) in support of H.R. 574, a bill to repeal and replace the SGR. H.R. 574 would stabilize payments at current rates for 2013 and replace scheduled reductions with positive and predictable updates from 2014 to 2017 before transitioning to new payment systems focused around improving quality and reducing costs.
  • Sent a letter to Rep. Schwartz and Rep. Joe Heck (R-3-NV) commending their introduction of H.R. 574.
  • Provided comments on March 5, April 22, and June 10 to the 2013 House Energy and Commerce and Ways and Means Committees on their framework for repealing the SGR and moving to new payment systems.
  • Provided comments to the Senate Finance Committee on SGR repeal and the Medicare fee-for-service system.
  • Encouraged SHM members to get involved and contact their Representatives in the through Action Alerts and Hill Visits.