In a joint statement issued last week, approximately 60 medical organizations asked that the Sustainable Growth Rate (SGR) be eliminated and replaced with a system that reflects increases in physicians' and other health professionals' practice costs. The SGR is part of the formula that Medicare uses to set physician payment rates. It is tied to the Gross Domestic Product and not to inflation or cost-of-practice increases, and is intended to be a budgetary restraint on Medicare's total expenditures. Among other things, the joint statement provides that if Congress and the Administration decide to adopt a transitional approach, it should:

  • Establish by law a transition pathway to complete replacement of the SGR by 2015.
  • Provide stability and predictability with positive, funded updates from 2010-2015 set by statute and linked to the Medicare Economic Index (MEI) for each year until a replacement takes effect.
  • Establish a realistic baseline for Medicare spending on physician services that eliminates the assumption that SGR-driven cuts will be implemented, greatly reducing the score assigned to legislation to repeal the SGR.
  • Use regulatory authority to remove physician-administered drugs from the SGR from 1996 on to help reduce the cost of repeal.
  • Use regulatory authority to adjust the Medicare Economic Index to include all costs of a current medical practice and use realistic productivity assumptions.

In addition, the organizations made the following recommendations:

  • Innovative payment system reforms that support physicians in the provision of high-quality care in a cost-effective manner need to be further developed and tested;
  • Americans of all ages should be encouraged to adopt healthier lifestyles, choose cost-effective care and play an active role in their medical care;
  • Improvements are needed in Medicare's physician quality reporting program;
  • Congress should support initiatives by organizations representing physicians and other health care professionals to bridge gaps in care, assure the appropriateness of services provided to Medicare beneficiaries and reduce inappropriate variation in health care utilization;
  • To completely redesign and redirect the financing and delivery system will require program officials to oversee a wide spectrum of tests and evaluations, develop tools to ensure that new systems are both fair and feasible, and prepare physicians and patients for the substantial changes that are envisioned.

You can access the full report here.