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The Medicare payment formula involves the sustainable growth rate (SGR), which penalizes providers with lower payments when the growth in utilization of health care is greater than the growth in the gross domestic product (GDP). Linking the SGR to the GDP is flawed because growth in health care is driven by factors other than the GDP, such as patient health needs, new technology, and public policies that encourage patients to seek certain services, such as preventive benefits – none of which providers have control of.
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