The Doc Fix: Another Reminder That Congress Can't Stick to its Own Deficit Reduction Plans


Another year, another doc fix—and another reminder of how lobbying pressure and Congressional skittishness can defang measures intended to reduce the deficit.

The fiscal cliff bill passed in the House yesterday includes once again includes a "doc fix"—a provision designed to avert big cuts in Medicare's physician reimbursements called for by the Sustainable Growth Rate (the SGR). The SGR, which ties physician's payment rates to the economy, was put in place as part of a 1997 deficit-reduction deal, and was intended to help restrain the growth of Medicare spending on payments to doctors. But after the SGR resulted in a 4.8 percent reimbursement cut in 2002, doctors put pressure on Congress to never let the cuts go into effect again.

It worked. Since 2002, Congress has never let the cuts go into effect, and some years it's given doctors a small raise. And because the SGR formula is designed to hold physician payments to a growth trend, the distance between what doctors are supposed to be paid under the formula and what they are actually paid has grown ever larger. This year, the formula called for a 26.5 percent cut. The cost of overriding it was about $30 billion.

Last year's doc fix was paid for by slicing money out of ObamaCare's insurance subsidies. This cost of this year's fix is split between hospitals and some Medicaid payments, according to Kaiser Health News. Unsurprisingly, the providers taking a hit aren't happy, especially since the cuts come on top of payment reductions included in ObamaCare. Those providers warn that they won't be able to serve their patients as well with lower payments.

The yearly ritual of the doc fix offers a regular reminder that Congress can't be trusted to stick to its own spending restraint and deficit reduction measures. And it also highlights both the political complications and market distortions caused by centralized price setting. Would access to physician health care decrease if Congress let the doc fix go into effect? Probably. On the other hand, it's quite costly to pay for a yearly doc fix—and increasingly difficult to find offsets. Those offsets, meanwhile, have consequences of their own for the providers who end up taking reduced pay in order to fund the fix.

The problem isn't necessarily that Medicare's physician payment rates are too high or too low, but that the rates are politically determined. The question we should be asking isn't: How high should doctor reimbursements be? It's: Who should be deciding how doctors are reimbursed? And the start of the answer is: not Congress.

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  1. Candace Bailey and Britta?

    Well done Suderman… well done.

  2. It also includes a bunch of “tax extenders”, to add to the list of games that Congress plays to pretend that deficits are projected to be smaller than they actually are.

    Tax extenders are the tax version of the “doc fix”. Every year they pass an extension of the same loopholes for special interests. That way congress can perpetually claim that those loopholes don’t exist or are set to expire. And then they can get the beneficiaries to keep giving them money so they can keep extending them.

  3. “Last year’s doc fix was paid for by slicing money out of ObamaCare’s insurance subsidies.”

    Obama-lama-ding-dongs should read that sentence and just let it set in for a few minutes.

  4. Not sticking to the plan is the plan.

    1. Not sticking to a plan is just as much a plan as sticking to a plan is. Tony told me.

    2. It is. The doc fix and the tax extenders are “permanently temporary” policies. They allow Congress to lie about future budget deficits, since the CBO is required to score these things as if they were temporary.

  5. The doc fix is in!

    1. remember we were talking about medicare competitive bidding a few weeks ago? this bill adds all diabetic supplies to the program.

      1. I blame NutraSweet.

        1. For once your catchall actually applies.

          1. I am his Emmanuel Goldstein.

            1. More like my Emmanuel Lewis. Does that make me your Mr. Papadopolis?

              1. You fill me with the urge to defecate.

                1. incontinence supplies are not part of the program at this time.

                  1. If an Episiarch shits in the woods, can Warty hear it?

                2. Then I have achieved my goals.

  6. The problem isn’t necessarily that Medicare’s physician payment rates are too high or too low, but that the rates are politically determined.

    This won’t be fixed until lawyers’ payment rates are politically determined, and set too low.

  7. Mrs. Dean recommends this summary of the new law:


    1. has Obama signed it yet?

  8. No more Attack of the Show. 🙁

    1. It’s a shame what G4/Comcast did to TechTV. It’s been downhill ever since Leo Laporte left.

      1. It’s been downhill ever since Leo Laporte left.

        + 1 Lockergnome

  9. Peter on this you are wrong. I am a dermatologist. I have been hammered by regulations from Medicare such that I have had to hire three more full-time people (one for each full-time doc equivalent) in the past four years to see the same number of patients. Physicians have been taken pay cuts relative to inflation almost yearly for 18 years. I now make the marginal 32 percent. Cutting my reimbursement 27 percent would cut my Medicare take-home pay 85%. Guess what? I will immediately stop taking Medicare patients. So will hundreds of thousands of other doctors. Medicare would come to a screeching halt. The DocFix is not reneging on a spending cut promise. It’s preventing collapse of Medicare. The whole SGr was based on ridiculous assumptions.

    There is a sick amount of waste in medicine. How about Doryx and Solydyn, branded versions of cheap generic acne meds that add $2000 and $6000/year to the cost of treating zits for no significant advantage? (I never prescribe them.) How about paying thousands more for knee joints that are no better or actually worse than the old generic ones? How about the ridiculous overuse of end-of-life ICU care that is little more than medical torture? These are places to cut spending. I am a dermatologist – as easy as it gets in medicine – and I think about my insurance exit strategy daily. Go ahead cut my reimbursement 27%. It would just make my decision easy. I am not going to work for free.

    1. As a physician also, it might be time we collectively just dump Medicare to illustrate how poorly run it is. Perhaps once the system is completely demolished we can move away from the inane regulations and back towards a “less government” approach to health care?

      A man can dream can’t he?

  10. That looks like its gonna be good dude.

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