Unsustainable growth rate: Physician perspective

Objective: To describe the sustainable growth rate history and calculations and why the present approach is not sustainable. Background. The sustainable growth rate was created to help control the growth rate in healthcare expenditures. Presently, it is responsible, at least in part, for reductions in physician payment. Two components of the sustainable growth rate make it unsustainable in its present form. These components are 1) the inability to go back and correct for values based on the wrong assumptions and 2) the inclusion of drug-related costs into the sustainable growth rate. Discussion: Few physicians have a full grasp of how their payment is structured from a mechanistic standpoint. A significant component of determining physician payment is established by the relative value unit, and how these are derived has been discussed in another article in this supplement. Once the relative value unit has been established, it is multiplied by the established conversion factor. A major component of the conversion factor is the sustainable growth rate. This article attempts to explain how the sustainable growth rate came into being, how it is calculated, and how it is flawed and contributing to decreasing physician payments. A few possible remedies are discussed, and the potential ramifications of those remedies on the physician community and the premiums of Medicare patients are examined.