Protecting Physicians and People with Medicare: Fixing the Sustainable Growth Rate

By Don Berwick, Administrator, Centers for Medicare & Medicaid Services. Cross-post from

One of the most important relationships people have is with their doctor. They rely on them for treatment when they are sick, counseling on ways to stay well, and for help navigating our complex health care system. But, unfortunately, a problem in Medicare’s payment system for doctors threatens that relationship and seniors and people with disabilities’ regular access to their doctor.

In 1997, Congress passed a law that was intended to slow the growth in Medicare spending so that the program would remain financially solvent. There were many good things in that law but one piece of it has proved to be problematic. A new formula – known as the Sustainable Growth Rate or SGR – was supposed to make sure we didn’t overpay for doctors’ services. Instead, it has resulted in the potential for huge cuts in Medicare fees that would not be good for doctors or patients.

For nine years in a row, Congress has enacted legislation to override large payment cuts to physicians. But lawmakers haven’t acted to get rid of the SGR and replace it with a formula that works. Since he took office, President Obama has called for a “permanent fix” to the SGR that would avoid this annual exercise. While we stopped the cuts scheduled for 2010 and 2011, we are now faced with the prospect of a 29.5 percent cut in 2012.

Today, the Centers for Medicare & Medicaid Services (CMS) issued proposed rules that spell out how this cut is calculated and warned that if Congress does not act in time, doctor fees will be slashed come January 1. We cannot – and will not – let this happen.

In his proposed budget for fiscal 2012, the President again called for getting rid of the SGR and he identified savings to pay for that change for the next two years. In his fiscal framework, the President identified additional savings that would pay for a 10-year fix.

For too long, we’ve been putting a Band-Aid on a wound that needs a permanent fix to heal. And we are committed to fixing this problem, once and for all.

At CMS, we are working every day to make Medicare a system focused on three major aims – better care, better health, and lower costs through improvement. To achieve this, physicians need to know what Medicare will pay and patients need to know that they can continue to see their doctors. This is the system 48 million people with Medicare need and the system we want to preserve for years to come.

Today happens to be the 45th anniversary of the implementation of Medicare. There couldn’t be a better time to begin renewing our commitment to the people it serves and the physicians who care for them.

Read the press release here.

To view the proposed rules, go here.

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