Abstract

Physician spending is complex and intrinsically related to national health care spending, government regulations, health care reform, private insurers, physician practice and patient utilization patterns. Consequently, since the inception of Medicare programs in 1965, several methods have been used to determine the amounts paid to physicians for each covered service. The sustainable growth rate (SGR) was enacted in 1997 to determine physician payment updates under Medicare part B with an intent to reduce Medicare physician payment updates to offset the growth and utilization of physician services that exceeds the gross domestic product growth. This is achieved by setting an overall target amount of spending for physicians' services and adjusting payment rates annually to reflect differences between actual spending and the spending target. Since 2002, the SGR has annually recommended reductions in Medicare reimbursements. Payments were cut by 4.8% in 2002. Since then, Congress has intervened on 13 separate occasions to prevent additional cuts from being imposed. This manuscript describes certain important aspects of the 2012 physician fee schedule.