Abstract

Federal healthcare spending has been a subject of intense concern as the US Congress continues to search for ways to reduce the budget deficit. The Congressional Budget Office (CBO) estimated that, even though it is growing more slowly than previously projected, federal spending on Medicare, Medicaid and the State Children's Health Insurance Program (SCHIP) will reach nearly $900 billion in 2013. In 2011 the Medicare program paid $68 billion for physicians and other health professional services, 12% of total Medicare spending. Since 2002 the sustainable growth rate (SGR) correction has called for reductions to physician reimbursements; however, Congress has typically staved off these reductions, although the situation remains precarious for physicians who accept Medicare. The fiscal cliff agreement that came into focus at the end of 2012 averted a 26.5% reduction to physician reimbursements related to the SGR correction. Nonetheless, the threat of these devastating cuts continues to loom. The Administration, Congress and others have devised many options to fix this unsustainable situation. This review explores the historical development of the SGR, touches on elements of the formula itself and outlines current proposals for fixing the SGR problem. A recent CBO estimate reduces the potential cost of a 10-year fix of SGR system to $138 billion. This has provided new hope for resolution of this long-standing issue.