Fundamentals Briefing

Health Policy Essentials: The Fundamentals of the SGR: Getting a Fix on Medicare’s Physician Spending
March 4, 2011


Laura A. Dummit


The fourth briefing in a series for new and returning congressional staff, this session provided an in-depth examination of Medicare's physician fees and the sustainable growth rate (SGR). The SGR, the update formula for Medicare's physician fees, is widely viewed as broken. It was supposed to keep aggregate Medicare physician spending on a "sustainable" trajectory, but it has not controlled the growth in the volume of physician services as intended. Instead of allowing the fees to be updated based on the formula, the Congress has overridden the SGR-determined updates since 2003. Without these legislative interventions, physician fees would be approximately 30 percent lower than they are today. As a result, "fixing" the SGR will cost in the neighborhood of $300 billion over 10 years. Speakers discussed the history of Medicare physician spending and the SGR, the causes of physician spending growth,the theory behind the SGR,the problems with the SGR, and the options for fixing the SGR.


Bruce Steinwald, Consultant and Former Director, Government Accountability Office (GAO), and Jessica Farb, Assistant Director, GAO

Slides from the presentation by Mr. Steinwald and Ms. Farb is available for download.

Related Materials

In 2015, a new version of the Forum's Health Policy Essentials series was conducted; please see its briefing book here.

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