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 (ACOs).

From the report: A permanent “doc fix” that would override both pending and expected automatic cuts in future years could add as much as $276 billion to federal spending over the next decade. There is no agreement in Congress on how best to make the fix or on how to pay for it, whether by raising taxes, cutting other federal spending, or simply adding the amount to the federal deficit. This brief describes the likely options for congressional action in the months and years ahead.

Full report: Paying Physicians For Medicare Services (PDF | 268KB)

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