HCAD 640 UMDC Medicare Sustainable Growth Rate Discussion


Peer 1: 

In August of 1997, the historic Balanced Budget Act was signed into law. Included in that Act was the Sustainable Growth Rate (SGR) provision which was enacted shortly after in October of 1997. Despite being enacted to help balance the federal budget by restricting Medicare spending as it related to physician services, the policy was full of complexities and confusion (Hirsch, et al., 2016). This later led Congress to repeal SGR in 2015 as part of the Medicare Access and CHIP Reauthorization Act, also known as MACRA (Spivack, Laugesen, & Oberlander, 2018). There are four factors that influence the SGR target that is used to help control Medicare expenditure growth for physician services. These factors are fees for physicians’ services, the number of Medicare beneficiaries, US gross domestic product, and service expenditures based on changing law or regulations (Hirsch, et al., 2016).

Fees for Physicians’ Services

Fees for physicians’ services is one of the types of Medicare coverage. Services are given a code which in turn, the codes have an associated value or fee that a physician charges. The fees are added up and this is one way a patient is billed for payment. In 2019, 63% of Medicare coverage fell under the FFS (Fees for Service), (U.S. Centers for Medicare & Medicaid, 2021).

Number of Medicare Beneficiaries

Medicare is a federally based insurance program that was introduced in 1965. To be eligible for Medicare, one must be either be 65 years of age or a person with a disability and those with End-Stage Renal Disease requiring dialysis or kidney transplant. In 2020, over 18% of American citizens were enrolled in the Medicare program, which equates to approximately 62.6 million people (Yang, 2021). With the aging population living longer the number of Medicare beneficiaries enrolled would be expected to increase. More people on Medicare leads to higher healthcare expenditures and resulting in a different way of delivering healthcare services. 

US Gross Domestic Product

Growth Domestic Product (GDP) is the overall health of an economy. Several factors weigh in on calculating a countries GDP such as consumer spending, investments, and government spending. Typically, if the economy is doing good then the GDP will reflect growth, and on the flip side, if the economy is performing poorly, the GDP decreases. In order to have sustainability, Medicare spending cannot consistently exceed GDP.

Service Expenditures Based on Changing Law or Regulations

Government policies and regulations are a determinant of service expenditures. An example is the Affordable Care Act of 2010 that invoked certain healthcare coverage mandates that would lead to increased accessibility and affordability. The recent regulatory actions that were put in place at the onset of the pandemic increased the need for telemedicine and payments permitted across state lines. Regulations were fast-tracked so that patients can receive healthcare services and healthcare systems could receive payment. 


Hirsch, J., Harvey, H., Barr, R., Donovan, W., Duszak, R., Nicola, G., Schaefer, P., & Manchikanti, L. (2016). Sustainable Growth Rate Repealed, MACRA Revealed: Historical Context and Analysis of Recent Changes in Medicare Physician Payment Methodologies. American Journal of Neuroradiology, 37(2), 210-214. https://doi:10.3174/ajnr.A4522

Spivack, S., Laugesen, M., and Oberlander, J. (2018). The Politics and Policy of Health Reform No Permanent Fix: MACRA, MIPS, and the Politics of Physician Payment Reform. Journal of Health Politics, Policy & Law, 43(6), 1025-1040. https://doi.org.exproxy.umgc.edu/10.1215/03616878-… 

Peer 2:

As stated in the reading, the two Medicare physician payment methodologies, known as merit based incentive payment system and the APM, the MACRA allowed for more switches to value based care systems in the healthcare industry. Beneficiaries are allotted more quality service and access through this change, while avoiding the cutting of physician spending. 

Implementing a Value-based care mode into virtually all healthcare practices would help in decreasing unnecessary spending while simultaneously improving patient care. Traditionally, in the field of healthcare, patient services were paid for through fee-for-service. Value-based models aim to reward outcomes while also limiting spending. Value- based care models are centered around patient treatment and have a goal to reduce hospital readmissions, improve preventative care methods, and use state of the art healthcare technologies (Vogenburg, 2019). Although value-based care is more effective, there hasn’t been a strong push to completely transition from volume-based care methods. So far, value-Based models have been implemented in Kaiser Permanente, the Cleveland Clinic and Geisinger Health system (Vogenburg, 2019) 

Value-based care models will decrease cost, improve quality and continue to improve patient access. Value-based care models focus on helping patients recover from their illnesses and injuries more quickly and seek to find the root of the issue. In return, patients do not have to attend frequent doctor’s visits or receive invasive procedures. From a pharmaceutical standpoint, they will also  spend less money on prescription medications, as time goes on. Overall, implementing this model will benefit both patients and providers. 


J.A. Hirsch, H.B. Harvey, R.M. Barr, W.D. Donovan, R. Duszak, G.N. Nicola, P.W. Schaefer and L. Manchikanti. American Journal of Neuroradiology February 2016,  37 (2) 210-214; DOI: https://doi.org/10.3174/ajnr.A4522 

Vogenberg, F. R. (2019). US Healthcare Trends and Contradictions in 2019. American Health & Drug Benefits, 12(1), 40–47.

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