Congress Mulling 2-Year Medicare ‘Doc-Fix’ With No Raise

Congress Mulling 2-Year Medicare ‘Doc Fix’ With No Raise

December 6, 2011 — A last-minute plan is shaping up in Congress to postpone a massive reduction in Medicare reimbursement to physicians for 2 years, and freeze rates in the meantime.
The political will to avoid a 27.4% pay cut scheduled for January 1 seems to be there on both sides of the aisle. Last week, House Majority Leader Eric Cantor (R-VA) said that Congress would pass legislation by December 16 to avert what physicians consider a catastrophic blow to their practice finances and seniors’ access to care. The question is how Republicans and Democrats will strike an agreement.
Rep. Phil Roe, MD (R-TN), vice chair of the GOP Doctors Caucus in the House, told Medscape Medical News that legislation on these controversial issues might be combined with a “doc fix” to the Medicare reimbursement crisis that would freeze rates at their current levels through 2013.
A 2-year fix, he said, would give lawmakers enough time to craft a replacement for the sustainable growth rate (SGR) formula for setting Medicare fee-for-service rates. That formula establishes an annual target for Medicare spending on physician services based partly on growth in the gross domestic product (GDP). Organized medicine considers that a bad metric, arguing that medical-practice costs have risen faster than the GDP. If actual Medicare spending on physician services exceeds the SGR target, next year’s spending target shrinks accordingly.
The SGR formula has triggered rate reductions every year since 2002, but starting in 2003, Congress has delayed everyone. Each postponement makes the next reduction even deeper.
Dr. Roe said Congress would consult with organized medicine to devise a new formula that compensates physicians for the value of their services, not their volume, which is what fee-for-service reimbursement encourages.
Freezing Medicare rates through 2013 as opposed to reducing them as planned would cost $38.6 billion over 10 years, according to an estimate issued last week by the Congressional Budget Office. In a Congress arguing over every dime in the federal budget, that 11-figure amount means a lot of jawboning.
In 2010, when Congress voted 5 different times to stave off Medicare pay cuts, Republicans always demanded that Congress make up the cost with “pay-for’s” as opposed to adding it to the deficit. This time around is no exception. Some of the pay-for’s under consideration involve partially defunding healthcare reform. Republicans, for example, have proposed reducing the budget for the Center for Medicare and Medicaid Innovation, created by the Affordable Care Act. Another pay-for would increase how much money the government could recoup from individuals who receive more in federal tax credits for insurance premiums than they warrant.
Echoing organized medicine, Dr. Roe stresses if that Congress allows Medicare rates to fall by 27.4% next year, physicians will not be able to keep their doors open for seniors, especially in light of how their Medicare reimbursement has increased by only 2% over the last 10 years.
“This is not about doctors getting rich,” said Dr. Roe. “It’s about being able to afford to see Medicare patients.”