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Sunday, December 15, 2013

Improving Value in Medicare with an SGR Fix

Today's post was shared by NEJM and comes from


Gail R. Wilensky, Ph.D.

December 11, 2013DOI: 10.1056/NEJMp1313927

Comments open through December 18, 2013


With the end of another year approaching and a scheduled reduction of 24.4% in physician fees, physicians and policymakers are once again concerned about what the sustainable growth rate formula (SGR) that is used to calculate Medicare's physician fees could mean for physician payment.1 This year, however, is different from most years, when attention has generally been limited to finding ways to postpone the scheduled payment reductions (which have actually been enacted only once). This year, for the first time, bipartisan, bicameral attention is being directed toward developing an alternative reimbursement system that rewards physicians who improve the quality and efficiency of care, rather than just kicking the proverbial SGR can down the road for one more year.

Since 1992, Medicare has been reimbursing physicians according to a fee schedule called the resource-based relative-value scale combined with a spending limit that since 1997 has been called a sustainable growth rate. The relative-value scale was designed to create more rational relationships among the payments for the various services that physicians provide. It sets relative prices on the basis of the amount of work associated with a service, the average practice expenses involved, and a geographic adjustment factor. The relative values are converted to dollars by means of a metric called...

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