Alliance on Health Reform Holds Briefing On SGR Alternatives
The Alliance for Health Reform and The Commonwealth Fund recently held a briefing in the Dirksen Senate Office Building entitled, “Beyond the SGR: Alternative Models.” Included in the panel were moderators Ed Howard of the Alliance for Health Reform and Stuart Guterman of The Commonwealth Fund. Presentations were given by Gail Wilensky, Economist and Senior Fellow, Project Hope; David Share, MD, Senior Vice President of Value Partnerships, Blue Cross Blue Shield of Michigan; and Mark McClellan, MD, Senior Fellow and Director, Initiative on Value and Innovation in Health Care, Brookings Institution.
The Sustainable Growth Rate (SGR) was created in 1997 as part of the deficit reduction legislation. Initially, the SGR was supposed to regulate federal healthcare spending by tying physician payment to an economic growth target. From 1997 to 2001, physicians saw modest pay increases due to the SGR. Starting in 2002 Medicare expenditures began to exceed the targeted growth rate calculated by the SGR and physicians experienced a 4.8 percent pay cut. The current issue, as described by Stuart Guterman, is that reductions were made across-the-board and did not succeed in controlling the growth in spending. As he stated in his presentation, “It [SGR] does not provide incentives to improve quality, appropriateness, and coordination of care.”