A brief published by the Robert Wood Johnson Foundation (RWJF) and Health Affairs examines problems with Medicare’s sustainable growth rate (SGR) formula.  The brief comes after Congress recently acted to prevent a 21 percent cut to Medicare physician reimbursement rates.  The brief outlines the impact of numerous versions of temporary and permanent physician rate adjustments.  The authors project that freezing rates through 2020 would increase federal spending by $276 billion over ten years, while raising the rates to reflect annual inflation would increase federal spending by $330 billion over the same period.  The authors also examine proposals for Medicare payment reform to curtail cost growth and encourage cost-effective care, including payment bundling and the development of accountable care organizations.

From the report:

There is widespread agreement that the existing system for paying for physician services under the Medicare program is broken. Under current Medicare rules, intended to restrain growth in spending, payments to physicians have been subject to supposedly "automatic" cuts for a number of years. However, Congress has consistently postponed those cuts and instead raised physician fees or held them constant.

Full report: Paying Physician for Medicare Services (PDF | 268.3 KB)

Robert Wood Johnson Foundation. (2010). Paying physicians for Medicare services.