The Doc Fix Is In?

I am generally skeptical about the prospects for a permanent "doc fix" — an end to the Medicare physician reimbusement formula that calls for doctor payment cuts every year, and that that Congress always overrides as a result. Members of Congress in both parties have long said that they want to ditch the formula, known as the sustainable growth rate (SGR), entirely. But the official estimated cost of doing so has always made that difficult. 

This week, however, a permanent fix got a lot easier. Because according to the Congressional Budget Office, it got a lot cheaper. Here's National Journal with the details:

In its budget outlook released on Tuesday, the CBO slashed the projected cost of a long-term "doc fix" by nearly half. That change means that if Congress wants to reverse the flawed and universally disliked 1997 Medicare payment formula known as the "sustainable growth rate," it won't have to come up with nearly as much money as previously expected.

The sustainable growth rate, or SGR, has been a perennial problem because it would pay doctors much less than they currently get for treating Medicare patients. Every year, Congress reverses the formula to keep payments from dropping, but only for a short period of time. In January, the latest one-year fix passed as part of the fiscal-cliff package.

This week, two proposals for reversing the SGR forever began circulating on Capitol Hill. On Wednesday, Reps. Allyson Schwartz, D-Pa., and Joe Heck, R-Nev., introduced a bill that would replace the formula with a temporary system of physician pay raises, to be followed by new payment methods that would reward more-efficient care.

I'm not sure I'd go so far as to say I think that a permanent doc fix is now likely. But unlike before, I do think it has a chance. 

For those who prefer transparent budgeting, that's a good thing: Congress was never likely to let the cuts go through, which means that the money was already going to be spent. A permanent fix would mean that future budget projections no longer include the implausible assumption that Congress will actually allow the cuts. It would also relieve doctors of the nagging worry that maybe, just maybe, Congress won't pass an ov

Still,  I remain skeptical that fixing the doc fix really fixes much of anything. For one, the CBO generated its newly lower price tag by assuming that we won't spend as much on Medicare in future years as previously thought, which is far from guaranteed. For another, Congress would replace the SGR with some other payment mechanism. And while it probably wouldn't create budget complications of the same magnitude, it would probably come with flaws and distortionary effects of its own.