Fixing the Doc Fix

At the end of this year, Medicare’s physician reimbursement formula calls for doctors to face a 29.5 percent fee cut. Needless to say, it’s a near certainty that this won’t happen. Since 2003, Congress has consistently passed overrides to the cuts dictated by the formula, known as the Sustainable Growth Rate. Last year alone, Congress passed five short-term extensions, including a 13-month extension that keeps rates from dropping until 2012.

This problem has become known as the “doc fix,” and in his most recent budget proposal, President Obama called for a permanent fix. But his ten-year proposal only pays to keep physician’s rates from dropping for two years (and it does so with cuts that are spread out over a complete decade, meaning we'll have spent the money before the cuts pay off).

Neither Democrats nor Republicans are terribly interested in letting doctors’ Medicare payment rates fall, hence the regular overrides. Doing so would anger two powerful interest groups: physicians and seniors. Given that the president and both parties want to ensure that the fees don’t drop, one has to operate under the assumption that they won’t. Somehow, reimbursement rates will be kept at (or at least near) current levels.

But that means coming up with money to pay for those higher fees. How much money? According to the Congressional Budget Office, the cost, which continues to grow the longer Congress delays a fix, is now about $380 billion. The problem is that these days, pay-fors—revenue raisers or spending offsets that could be used to fund the fix—are hard to come by. That’s why the president proposed a decade-long series of snips in order to pay for extending current rates by just two years. And why are pay-fors so hard to come by? Because the biggest, most obvious Medicare cuts—about $500 billion worth—were used to fund last year’s health care overhaul. (And it should be noted that even those cuts are far from certain to go through and actually pay off as projected.)

If you presume that the doc fix will be funded somehow—even if it means more short-term extensions and deficit spending—then you have to think of this as irresponsible on the part of President Obama and the Democratic members of Congress who voted for the health care overhaul. They had a $380 billion problem to fix within Medicare, their existing system. But after coming up with changes that they believed would reduce the cost of that system by about $500 billion, they ignored the problem they already had and spent the money on a new entitlement instead.  

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  • ||

    These are not the dollars you're looking for.

  • Middle Class||

    Put it on my tab! I don't mind at all!

  • More Middle Class||

    On second thought, put it on my son's tab.

  • cynical||

    It's just monopoly money anyway.

  • ||

    That actually does make a lot of sense when you think about it.

    www.privacy-online.it.tc

  • Spartacus||

    That’s why the president proposed a decade-long series of snips in order to pay for extending current rates by just two years. And why are pay-fors so hard to come by? Because the biggest, most obvious Medicare cuts—about $500 billion worth—were used to fund last year’s health care overhaul.

    Wasn't the scheduled cuts in reimbursement rates one of these big medicare cuts used to get 500B in "savings"?

  • NoVAHockey||

    What's your opinion that the "doc fix" is an accounting fiction. This was discussed at MedPAC not too long ago. Basically, one of the commissioners said to not worry about paying the accumulated costs of the "fixes" since they were just spending goals we missed.

  • ||

    What's your opinion that the "doc fix" is an accounting fiction.

    An accounting fiction that also doubles as political leverage (to keep the docs in line) and as political obfuscation (so handy to have when you need to hide the extent of your fiscal malpractice in budget projections).

  • NoVAHockey||

    also handy to have "must pass" legislation at the ready.

  • ||

    The problem with a fee for a particular service is that doctors merely perform more services.
    Say you go in for a proctology exam - medicare billing rate is cut 80% (for one finger - doctor makes up for diminished fee by increasing the number of proctology tests by 500%, i.e., using all five fingers AKA shoving a fist up your as*). And who doesn't want state of the art testing when your checking for cancer???

  • Doc B||

    "And who doesn't want state of the art testing when your checking for cancer???"...and you'd be the first one in line asking for the "state of the art" testing and treatment, no matter what the cost. Physicians make up a very small part of the entire Medicare budget. Lumped in with MD's are "other clinical services" which are increasing at a much faster rate than professional fees.

    What you will see happen, and has started already, are physicians completely opting out of insurance and Medicare altogether and only excepting cash paying patients because reimbursements are so low, while practice costs continue to rise.

    And I'm sure that you want to do your part to balance the budget by working more and more hours for less and less. And having some pencil necked geek in a back room set your pay because he (they) don't know how to run a tight ship.

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