Medicare Spending: Preliminary Findings Regarding an Approach Focusing on Physician Practice Patterns to Foster Program Efficiency Page: 3 of 12
This text is part of the collection entitled: Government Accountability Office Reports and was provided to UNT Digital Library by the UNT Libraries Government Documents Department.
Extracted Text
The following text was automatically extracted from the image on this page using optical character recognition software:
Mr. Chairman and Members of the Subcommittee:
I am pleased to be here today as you discuss options for improving how
Medicare pays physicians. Your task is not simple, as you seek reforms
that can help moderate spending growth while ensuring that beneficiaries
have appropriate access to high-quality physician services and physicians
receive fair compensation for providing those services. Medicare's current
system of spending targets used to moderate spending growth and
annually update physician fees is problematic.
This spending target system-called the sustainable growth rate (SGR)
system-adjusts Medicare's physician fees based on the extent to which
actual spending aligns with specified targets. If the growth in the number
of services provided per beneficiary-referred to as volume-and in the
average complexity and costliness of services-referred to as intensity-is
high enough, spending will exceed the SGR target. From 1999-the first
year that the SGR system was used to update physician fees-through
2001, physicians received fee increases annually. Since 2002, actual
Medicare spending on physician services has exceeded SGR targets, and
the SGR systems has called for fee cuts to offset the excess spending. In
2002 the SGR system reduced physician fees by nearly 5 percent. Fee
declines in subsequent years were averted only by administrative and
legislative actions that modified or temporarily overrode the SGR system.'
In the absence of additional administrative or legislative action, the SGR
system will likely reduce fees by about 5 percent a year for the next
several years.
The potential for a sustained period of declining fees has raised
policymakers' concerns about the appropriateness of the SGR system for
updating physician fees and about physicians' continued participation in
the Medicare program. A particular concern is that the SGR system acts as
a blunt instrument in that all physicians are subject to the consequences of
excess spending-namely, downward fee adjustments-that may stem
from the excessive use of resources by only some physicians. However, as
we have discussed in our prior work, the SGR system serves an importantGAO-07-567T
1For example, the Medicare Prescription Drug, Improvement, and Modernization Act of
2003 (MMA) specified a minimum update of 1.5 percent for both 2004 and 2005. Pub. L.
No. 108-173, 601(a)(1), 117 Stat. 2066, 2300.Page 1
Upcoming Pages
Here’s what’s next.
Search Inside
This text can be searched. Note: Results may vary based on the legibility of text within the document.
Tools / Downloads
Get a copy of this page or view the extracted text.
Citing and Sharing
Basic information for referencing this web page. We also provide extended guidance on usage rights, references, copying or embedding.
Reference the current page of this Text.
United States. Government Accountability Office. Medicare Spending: Preliminary Findings Regarding an Approach Focusing on Physician Practice Patterns to Foster Program Efficiency, text, March 6, 2007; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc293021/m1/3/: accessed April 25, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.