This year, Medicare physicians face a 24 percent pay cut. The reason: Congress updates Medicare doctors’ payments by a formula called the Sustainable Growth Rate (SGR). While complex, the SGR formula attempts to limit the growth in Medicare physician payment to growth in gross domestic product (GDP). If physician payments are less than GDP growth in any given year, then physician payments automatically increase the following year. If physician payments exceed the GDP growth in any given year, they are automatically reduced the next year. Because physician payment has outpaced economic growth, payment cuts are routinely triggered.
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