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Sustainable Growth Rate (SGR)

Definition: The Sustainable Growth Rate was a formula that was supposed to be used to determine Medicare Part B payment rates for physicians and other health professionals.

History: In 1997, Congress created the SGR formula in order to help limit spending on Medicare physicians’ services. Since 2002, what Medicare spends on physician services has exceeded a SGR formula cap, so physicians have faced payment cuts (also called negative updates). However, for the past decade, Congress has passed a series of short-term fixes (14 of them) to prevent the cuts from taking place, having to find other health care savings to offset the cost of fixing the physician cuts. In April 16, 2015 the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA or “permanent doc fix” was signed into law by President Obama. The measure went into effect in July 2015.