Short-Term Fixes to the Sustainable Growth Rate Process . 5.0 Changes in Target-Setting Processes

10/30/2006

Changes in the UAF formula can be used to change the size of penalties/rewards associated with over-/under-spending, which in turn changes the rate at which provider payments would change year to year.  An alternative approach is to alter the way in which target spending is defined or the composition of spending that is counted towards target spending.  Changes in the size of the target or its composition may change over-/under-spending and its accumulation, thereby changing the UAF and the payment update.  Two refinements are described in this section.  The first is a change in the SGR, the rate at which the spending target is calculated; the second is a change in the composition of SGR spending – elimination of drug and lab spending from the payment update process.

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