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The Future of Medicare: 15 Proposals You Should Know About

Pros and cons of options on the table in Washington

11. Address the Sustainable Growth Rate (Physician Payment) Formula

In 1997, the law established a new formula for paying Medicare doctors. The goal of the "Sustainable Growth Rate" (or SGR) was to reduce health care costs by setting limits on how much doctors who treat Medicare patients could be paid. Fees have not been reduced in recent years, as the SGR formula calls for, because Congress has repeatedly intervened to prevent payment reductions. There are several proposals to reform the Medicare doctor payment system. Some proposals include freezing payments for primary care physicians while temporarily decreasing rates for specialists. Maintaining current payment rates for Medicare doctors would cost $316 billion over 10 years, according to the Congressional Budget Office.

The SGR formula was flawed from the beginning. The physician fee cuts that it calls for cannot be implemented. That formula should be replaced with payment rules that encourage more doctors to provide primary care. (Henry J. Aaron, Brookings Institution)

Opinion: Doctors who take Medicare patients rightly complain bitterly about a government payment rule that is designed to cut their fees automatically every year to keep Medicare spending on doctors within a budget. This rule needs to be eliminated and other steps taken to prevent the future cost of Medicare from skyrocketing. (Stuart Butler, Heritage Foundation)

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