Sustainable Growth Rate system

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Sustainable Growth Rate system

A system which replaced the Medicare Volume Performance Standard (MVPS) as the mechanism for ensuring Medicare physician spending does not exceed expenditure targets. The SGR system uses a targeted growth rate based on gross domestic product growth, price changes, and changes in Medicare enrollment and benefits.

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 SGR. Payment updates are equivalent to the MEI multiplied by an “adjustment factor”, which reflects how spending compares to the SGR targets.
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References in periodicals archive ?
The SGR system was supposed to limit the rate of increase in Medicare providers' reimbursement rates to the rate of increase in the U.S.
"For physicians that means we're stuck with an SGR system that everyone agrees is just not good for health care and not good for patients," he said.
The SGR system, the statutory method for determining the annual updates to the Medicare physician fee schedule, was established as part of the Balanced Budget Act of 1997 (P.L.
With that plan in hand, it would be easier for members of Congress to justify spending $300 billion to replace the SGR system.
Over a decade ago, Congress adopted the SGR system to address rising spending on physician services by requiring that Medicare prices drop if volume growth exceeded a target.
Unless Congress acts to change the SGR system an indefinite series of these stop gap "fixes" will be required to fend off a major drop in Medicare reimbursement.
(19) The SGR system therefore disproportionately penalizes primary care physicians because payments to all physicians are cut regardless of which specialties are responsible for excess spending.
The SGR system limits the amount by which total national Medicare physician spending is allowed to increase each year by setting yearly spending targets.
The SGR system "fails to create appropriate incentives to improve performance," he said.
Subsequent administrative and legislative actions modified or overrode the SGR system to avert fee declines in 2003, 2004, and 2005.
Physicians have argued that the SGR system's allowance for spending growth because of volume and intensity increases--the growth rate of real gross domestic product per capita--is too low and inflexible.