Gail Wilensky, Ph.D., Senior Fellow, Project Hope, Bethesda, MD, stated that "The most fundamental problem with the SGR is that the fulfillment of its objectives are inconsistent with the incentives it produces--which can and frequently does result in a very perverse dynamic." Dr. Wilensky went on to explain that the objective of the SGR is to control total spending by physicians, however it does not affect and is not driven by the volume and intensity of spending of any individual physician and may even give incentives for individual physicians to increase the volume and intensity of services they provide.

The system is fatally flawed, according to Nancy H. Nielsen, M.D., Ph.D., President, American Medical Association, Chicago, IL. Dr. Nielsen testified, "The SGR is linked to factors that do not correlate to medical practice cost inflation, nor does the SGR take into account significant contributors to utilization growth in physicians' services, such as technological advances and shifts in care from the hospital to physician office, that are beyond physicians' control. Yet, when Medicare utilization of physicians' services exceeds the SGR target, physicians are unfairly penalized with steep cuts in their payment update."


Comments on the issue may be submitted through Thursday, September 25, 2008, on the Committee's website, http://waysandmeans.house.gov/Hearings.asp?congress=18

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