SGR fix suddenly looks affordable
Bookmark and Share

Dermatologists may face a variety of reimbursement challenges in the future (see "Shifting sands")  — but the sustainable growth rate, or SGR, may not be one of them. After years of rising, the price tag the Congressional Budget Office assigns to a 10-year fix to the SGR — the figure by which budget proposals are judged in Washington, D.C. — has plunged in each of the last two years. As a result, congressional hearings this summer showed promise, and observers are optimistic that physicians may see something other than a months-long patch to address the problem. Despite calls from most major medical associations to find a permanent solution to the ongoing Medicare payment problem caused by the SGR, Congress has consistently passed temporary fixes, sometimes lasting only a few months, for most of the last decade.

The SGR formula, established by the Balanced Budget Act of 1997, sets a target for cumulative Medicare spending and requires spending in subsequent years to drop to make up for spending above the target in prior years. Until recently, that meant that the price tag for eliminating the SGR grew each year, making it harder and harder for Congress to find offsets to pay for fixing the problem. The chart below illustrates how the cost of a 10-year fix — defined simply as freezing payments at current levels — ballooned until the last two years of slower-than-expected medical spending growth.