astronomy

Medicare Sustainable Growth Rate

Medicare Sustainable Growth Rate is a astronomy topic covered in the lgStudy science library. This page brings together a partial reference excerpt, illustrations, worked examples, real-world applications and a short study plan, so you can understand Medicare Sustainable Growth Rate rather than just read about it. In short: The Medicare Sustainable Growth Rate (SGR) was a method used by the Centers for Medicare and Medicaid Services (CMS) in the United States to control spending by Medicare on physician services. President Barack Obama signed a bill into law on April 16, 2015, the Medicare Access and CHIP Reauthorization Act of 2015, which ended use of the SGR.

Key takeaways

Medicare Sustainable Growth Rate belongs to astronomy; place it in that map before memorising details.
Learn the definition first, then one example that makes the definition concrete.
Connect Medicare Sustainable Growth Rate to a quantity you can measure, compute or draw — that is where exam questions come from.
Reproduce the core statement of Medicare Sustainable Growth Rate from memory before moving on to harder problems.

Reference excerpt

The Medicare Sustainable Growth Rate (SGR) was a method used by the Centers for Medicare and Medicaid Services (CMS) in the United States to control spending by Medicare on physician services. President Barack Obama signed a bill into law on April 16, 2015, the Medicare Access and CHIP Reauthorization Act of 2015, which ended use of the SGR. The measure went into effect in July 2015. Enacted by the Balanced Budget Act of 1997 to amend Section 1848(f) of the Social Security Act, the SGR replaced the Medicare Volume Performance Standard (MVPS), which was the previous method that CMS used in an attempt to control costs. Generally, this was a method to ensure that the yearly increase in the expense per Medicare beneficiary did not exceed the growth in GDP. Every year, the CMS sent a report to the Medicare Payment Advisory Commission, which advised the U.S. Congress on the previous year's total expenditures and the target expenditures. The report also included a conversion factor that would change the payments for physician services for the next year in order to match the target SGR. If the expenditures for the previous year exceeded the target expenditures, then the conversion factor would decrease payments for the next year. If the expenditures were less than expected, the conversion factor would increase the payments to physicians for the next year. On March 1 of each year, the physician fee schedule was updated accordingly. The implementation of the physician fee schedule update to meet the target SGR could be suspended or adjusted by Congress, as was done regularly (this was referred to as a doc fix). The repeated task of implementing a "doc fix" led to the permanent repeal of the SGR, or "permanent doc fix," in 2015.

Formula Section 1848(f)2 of the Social Security Act specified the formula for calculating the SGR. There were four factors used in calculating the SGR:

The estimated percentage change in fees for physicians’ services. The estimated percentage change in the average number of Medicare fee-for-service beneficiaries. The estimated 10-year average annual percentage change in real GDP per capita. The estimated percentage change in expenditures due to changes in law or regulations. Prior to the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act (MMA), the SGR was calculated using a single year's real GDP per capita. After the MMA was enacted in 2003, the SGR was calculated using a 10-year annual average growth in real GDP per capita.

Conversion factor In order to meet the target SGR for the next calendar year, the physician fee schedule was updated accordingly. The update was calculated using two factors:

One plus the Medicare Economic Index (MEI) One plus the Update Adjustment Factor (UAF) The MEI measured the weighted average price change for various inputs involved with producing physicians’ services. The UAF compared actual and target expenditures and was determined by a formula that included the target and actual expenditures and the SGR. By law, the UAF could not exceed -7.0%.

Past adjustments

2000 - 2009 adjustments Section 101 of the Tax Relief and Health Care Act of 2006 (MIEA-TRHCA) provided a 1-year update of 0% for the conversion factor for CY 2007 and specified that the conversion factor for CY 2008 must be computed as if the 1-year update had never applied. Section 101 of the Medicare, Medicaid, and SCHIP Extension Act of 2007 (MMSEA) provided a 6-month increase of 0.5% in the CY 2008 conversion factor, from January 1, 2008, through June 30, 2008, and specified that the conversion factor for the remaining portion of 2008 and the conversion factors for CY 2009 and subsequent years must be computed as if the 6-month increase had never applied. Section 131 of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) extended the increase in the CY 2008 conversion factor that was applicable for the first half of the year to the entire year, provided for a 1.1% increase to the CY 2009 conversion factor, and specified that the conversion factors for CY 2010 and subsequent years must be computed as if the increases had never applied.

2010 - 2013 adjustments The estimated SGR to go into effect on March 1, 2010, was -8.8%, and the conversion factor for the physician fee schedule was -21.3%. On March 3, 2010, Congress delayed the enforcement of the conversion factor until April 1, 2010, with the passage of the Temporary Extension Act of 2010. On April 15, 2010, Congress enacted the Continuing Extension Act of 2010 to again delay the implementation and extended the 2009 rate to June 1, 2010. On June 25, 2010, President Obama signed the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 that not only delayed implementation of the conversion factor until December 1, 2010, but also increased reimbursements by 2.2%. The 2.2% increase was retroactive to June 1, 2010, and expired on November 30, 2010. On December 16, 2010, President Obama signed the Medicare and Medicaid Extenders Act of 2010 into law, delaying the implementation of the SGR until January 1, 2012. This prevented a 25% decrease in Medicare reimbursements from taking effect on January 1, 2011. When President Obama signed the Middle Class Tax Relief and Job Creation Act of 2012 on February 22, 2012, the implementation of the conversion factor was again delayed until January 1, 2013, when the cut was estimated to be 27.4%. Congress passed the American Taxpayer Relief Act of 2012 on January 1, 2013, which stated in section 601 that the conversion factor for 2013 "shall be zero percent." This delayed the implementation of the conversion factor until January 1, 2014.

2014-2015 adjustments The SGR was supposed to trigger the next set of Medicare reimbursement cuts on April 1, 2014, for cuts of 24 percent. In order to avoid this, the House and Senate turned to yet another bill to delay the SGR cuts until March 2015. That bill was the Protecting Access to Medicare Act of 2014 (H.R. 4302; 113th Congress).

… excerpt ends here. Continue reading the full article.

Worked examples

Example 1 — a first encounter with Medicare Sustainable Growth Rate

Start with the simplest possible case. Write down what Medicare Sustainable Growth Rate claims or describes in one sentence, then invent the smallest concrete situation in which that sentence is true. In astronomy, the smallest case is usually a single object, a single equation or a single measurement. Check that every symbol or term in your sentence has a meaning in that case.

Example 2 — changing one variable

Take the situation from Example 1 and change exactly one quantity: double it, halve it, or set it to zero. Predict what should happen to Medicare Sustainable Growth Rate before you calculate. Comparing your prediction with the result is the fastest way to find out whether you understand the idea or only the words.

Example 3 — an exam-style question

Typical questions about Medicare Sustainable Growth Rate ask you to (a) state it precisely, (b) apply it to given data, and (c) explain a limitation. Practise writing all three answers in under five minutes; the third part is what separates a full-mark answer from an average one.

Applications of Medicare Sustainable Growth Rate

In research: Medicare Sustainable Growth Rate appears in astronomy research whenever the underlying quantities have to be modelled precisely. Papers usually cite it as a starting assumption and then explore where it breaks down.
In technology and industry: Engineering practice reuses Medicare Sustainable Growth Rate in design rules, simulations and safety margins. Knowing the idea lets you read a specification sheet and understand why the numbers look the way they do.
In the classroom: Medicare Sustainable Growth Rate is common in secondary-school and first-year university syllabi. It links to neighbouring topics Government finances in the United States, Health care reform, Health education, so understanding it makes those chapters shorter.
In everyday life: Look for Medicare Sustainable Growth Rate outside the textbook — in sport, cooking, traffic, electronics or the sky above you. An example you found yourself is remembered far longer than one you were given.

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How to study Medicare Sustainable Growth Rate in 20 minutes

Read the reference excerpt below once, without taking notes.
Close the page and write down what Medicare Sustainable Growth Rate means in your own words.
Compare your version with the excerpt and mark what you missed.
Work through the three examples above with pen and paper.
Explain Medicare Sustainable Growth Rate out loud to somebody else — or to Teacher Smith in the lgStudy chat.

Frequently asked questions

What is Medicare Sustainable Growth Rate in simple terms?

Why does Medicare Sustainable Growth Rate matter?

Because it connects several astronomy ideas at once: it gives you a definition you can apply, a quantity you can calculate, and a way to check whether a result is plausible.

How should I study Medicare Sustainable Growth Rate?

Read the excerpt, restate it from memory, then work through the examples and applications listed on this page. The five-step study plan above takes about twenty minutes.

What does this page cover?

It gives you a compact reference excerpt plus original lgStudy explanations, examples, applications and study material on Medicare Sustainable Growth Rate.