Medicare Economic Index
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Medicare Economic IndexA measure of (physician) practice cost inflation developed in 1975 as a way of estimating annual changes in physicians’ operating costs and earnings levels. The MEI is based on multiple factors—e.g., salaries, prices of supplies and equipment, etc.—and is used by Medicare to determine annual adjustments of physician reimbursement for services.
The Medicare Economic Index (MEI) is the baseline for each year’s payment update calculation, and used in the target calculation to determine the price component of the Sustainable Growth Rate (SGR). Payment updates are equivalent to the MEI multiplied by an “adjustment factor”, which reflects how spending compares to the SGR targets. Since 1992, the MEI has been weighed in connection with the update factor for a physician fee schedule.