Does the Sustainable Growth Rate work?

Jessica Farb • MAY 18, 2015

Jessica Farb of the U.S. Government Accountability Office explains how Medicare pays physicians and other healthcare providers under the Resource-Based Relative Value Unit (RBRVU) system. Farb also explains what the Sustainable Growth Rate (SGR) formula is and how it has changed over the years. Farb says that from a policy standpoint, the SGR approach has long been noted as a "can-kicking exercise." SGR was permitted to work per statute from 1998-2002, but it has been overridden every year starting with 2003. She argues that without the SGR, spending on Medicare most likely would have been higher, but that the SGR is also a very blunt policy instrument that creates annual uncertainty for physicians and beneficiaries. Farb predicts continued movement away from fee-for-service payments and towards value-based payments.

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