Considerations for Reforming the Sustainable Growth Rate System
The Government Accountability Office report below covers (1) how the SGR system is designed to moderate the growth in spending for physician services, (2) why physician fees are projected to decline under the SGR system, and (3) options for revising or replacing the SGR system and their implications for physician fee updates and Medicare spending.
The GAO stated, "Together Congress and CMS could implement several modifications to the SGR system, for example, by increasing the allowance for volume and intensity growth to GDP plus 1 percentage point, resetting the spending base for future SGR targets, and removing prescription drugs. According to CMS OACT simulations, this combination of options would result in positive updates ranging from 2.2 percent to 2.8 percent for the 2006-2014 period. CMS OACT projected that the combined options would increase aggregate spending by 23 percent over the 10-year period."
Details on the options above are included in the report. The GAO also cautioned, "Medicare faces the challenge of moderating the growth in spending for physician services while ensuring that physicians are paid fairly so that beneficiaries have appropriate access to their services.… almost any change to the SGR system is likely to increase program spending above the [budgeting] baseline."