HHS Secretary Mike Leavitt has come out and admitted that Medicare's "sustainable growth rate" formula used to determine physician compensation is more or less broken. In a recent meeting with reporters, Leavitt didn't disclose whether he had an alternative scheme in mind, but conceded that the agency couldn't keep stumbling along making short-term changes to address SGR-related problems. Not only did providers face a 10 percent Medicare cut in 2007--which was put on hold by Congress only until July 2008--but future cuts could hit 15 percent to 20 percent, he noted. It's not clear whether Leavitt will be proposing a new mechanism within the president's budget request for HHS, which will be released during the first week of February--but he did say that generally speaking, he believes that the way to fix this problem will be to find ways to pay more for higher-quality care.

To get more background from Leavitt's speech:
- read this Modern Healthcare piece [1] (reg. req.)

ALSO: The Medicare Payment Advisory Commission (MedPAC) voted last week for a 1.1 percent increase in Medicare payments for doctors in 2009. Article [2]

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