Health Affairs October 25, 2022
Medicare pays for physician services on the basis of a fee schedule. The fee schedule assigns a “relative value” for each service that reflects the estimated resources necessary for that service (in relation to a reference service) and a “conversion factor” translates the relative value for each service into a dollar amount. An index of input prices faced by medical practices, called the Medicare Economic Index (MEI), was one of the factors used when the Centers for Medicare and Medicaid Services (CMS) annually updated the conversion factor.
From 2002 to 2015, the Congress repeatedly passed legislation avoiding reductions in the conversion factor as called for under the Sustainable Growth Rate (SGR) mechanism, with the resulting updates being less than inflation...
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