Issue Background

The Medicare Program’s Sustainable Growth Rate (SGR)

MSNJ priorities for SGR Reform:

  • Positive base payment updates during transition; Capping penalties for non-reporting to a limited amount;
  • Changes in the proposed value-based purchasing program to reflect medical principles and guidelines;
  • Flexibility for smaller practices, including a more equitable structure of performance comparisons, added financial and technical assistance, and an exemption for physicians nearing retirement;
  • Alternative payment model (APM) provisions, including multiple pathways to achieving various thresholds and for specialists to develop and obtain approval for new models.

Introduced in 1997, Medicare’s Sustainable Grown Rate (SGR) payment formula for physicians was created to reduce federal expenditures in the Medicare program. Over the past decade, in an annual ritual, Congress has acted to avert significant physician fee cuts that would have occurred under the statutory SGR formula on January 1, but for the congressional “patch.”  Each year, practices are disrupted at least once, by patches to the Medicare physician fee schedule and retroactive payment adjustments because Congress often does not act in a timely manner.