State of the Industry 2011: Sustainable Growth Rate

October 1, 2010

A cumulative 23% cut is scheduled for this December. Another 6.5% cut in January 2011 and a 2.9% cut in January 2012 are scheduled.

The Medicare Sustainable Growth Rate (SGR) formula has called for a reduction in physician fees every year since 2002, but each time, Congress has passed a temporary fix to avoid the pay cuts.

CBO estimated late last year that if Congress froze physician payment rates at current levels for 10 years without the SGR, it would cost the federal budget more than $300 billion, according to Stuart Guterman, vice president for payment and system reform at the Commonwealth Fund.

Medicare has not yet found evidence of widespread access problems for Medicare beneficiaries, but it might already be happening.

For example, the American Academy of Family Physicians reports that 13% of members said they didn't participate in Medicare last year, up from 8% in 2008. The American Medical Assn. reports that 17% of more than 9,000 doctors surveyed restrict the number of Medicare patients in their practices.

"There have been anecdotes about doctors refusing to take new Medicare patients and difficulties with access to care in some areas," Guterman says. "This year, when there was considerable wrangling over the SGR, that may have pushed some doctors over the edge. In any case, there is a continuing worry about how far can you can push down payment rates before we start to see access problems."

He predicts that a solution to the SGR methodology will be implemented within the next five years.