Fix Health Care Policy

How to Fix the Medicare Physician Payment Problem

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The congressional formula that determines the annual Medicare payment update for physicians, the sustainable growth rate (SGR), was supposed to cut Medicare doctors’ pay each year starting in 2002. But that congressional formula is so flawed and unworkable that every year since 2003, Congress has stepped in to stop it from going into effect. In 2013, without another congressional “doc fix,” the physicians would have had a pay cut of 26.5 percent.

The formula is called the sustainable growth rate because it links Medicare physician pay increases to the performance of the general economy, not to the market-based conditions of supply and demand that would determine the price of medical services. So if Medicare physcians’ pay in any given year rises faster than economic growth, then their pay is automatically reduced the following year.

There’s an added dimension to this problem: Every year the pay cut is delayed, the size of the cut the following year is bigger.

Read the rest on The Foundry…

Tags: doc fix, flawed, Medicare, pay increase, performance, premium support, SGR, Sustainable Growth Rate, unworkable

Junk the Medicare Physician Payment Formula

In January 2012, Medicare physicians face a 27.4 percent cut in their payment for treating senior and disabled citizens.

Congress, as it has routinely since 2003, is feverishly preparing legislation to stop its own goofy Medicare payment formula from going into effect. If they don’t succeed this year, seniors can be assured of severe problems accessing physician care.

The reason Congress goes through this silly routine almost every year is that it is unable or unwilling to make serious changes in the Medicare program. Today, Medicare payment for doctors is determined by a complex fee system, the Resource-Based Relative Value Scale (RBRVS), in which payment is tied to a social-science measurement of doctors’ estimated time, energy, and resources in providing a medical service.

While the Reagan Administration (naturally) opposed RBRVS, its advocates sold it (incredibly) to the Bush Administration and Congress in 1989 as a “scientific” way to pay doctors. So the government sets the fees for over 7,000 medical services, and that payment is further restricted by price controls. Since 1989, doctors cannot legally charge Medicare patients more than government officials say.  (Read the rest on The Foundry…)

Tags: doc fix, Medicare, physician formula payment, Seniors

Doctors Need a Permanent Fix to the Medicare Payment Mess

This week, the House Energy and Commerce Committee will consider solutions to Medicare’s flawed physician payment scheme. Physician payment is annually updated on the basis of the Sustainable Growth Rate (SGR), a special economic formula which, as configured today, would result in deep annual payment cuts.

This directly threatens seniors’ access to care as it becomes financially infeasible for doctors to continue to take new Medicare patients under progressively lower payments. The problem will only get worse in the future, and it represents one of the most poignant examples of the negative impact of central planning on doctors and patients under the current Medicare program. (Read the rest at The Foundry…)

Tags: doc fix, House Energy and Commerce Committee, low reimbursement, Medicare, ObamaCare, payment formula

Secretary Sebelius Questioned Before the Senate Finance Committee

Health and Human Services (HHS) Secretary Kathleen Sebelius testified in front of the Senate Finance Committee yesterday about the President’s 2012 fiscal year budget and the status of health care reform. Despite the projected $1.6 trillion deficit in the President’s budget, Sebelius claimed that it represents “the blueprint for putting (President Obama’s) vision into action and making the investments that will grow our economy and create jobs.” Here are some of the noteworthy exchanges the Secretary had with Senators on the committee.

Senator Max Baucus (D–MT) lauded the Medicare “doc fix” in the budget, although he expressed a desire for a permanent fix. The doc fix in the budget is a two-year fix paid with spending offsets. However, as Bob Moffit and Kate Nix point out, the temporary fix is paid for with spending offsets far in the future, indicating that the President is once again punting difficult decisions. (Read the rest at The Foundry…)

Tags: doc fix, HHS Secretary Kathleen Sebelius, Medicare, ObamaCare, Sen. Max Baucus, Senate Finance Committee

President’s Budget Contains One Sorry Excuse of a Doc Fix

President Obama has received praise for including a two-year Medicare “doc fix” in his FY 2012 budget proposal, but hold the applause.

Every year, physician reimbursement for treating Medicare patients is scheduled to decrease according to the “sustainable growth rate” formula. This complex and unworkable policy is intended to create savings, but Congress has delayed the cuts for years, since allowing such dramatic cuts would cause many physicians to drop Medicare patients altogether, resulting in severely reduced access to care for seniors.

Physicians and patients need a permanent solution to this ongoing problem. Instead, the President’s budget continues to kick the can down the road by “paying for” a two-year fix only. This is not acceptable. Finding savings to extend the “doc fix” is the right thing to do, but the President’s budget uses long-term spending reductions over the next decade to pay for a short-term fix. Those savings won’t, then, be available to pay for preserving payment rates for physicians in those years—and that’s if they even occur at all. (Read the rest at The Foundry…)

Tags: doc fix, Medicare, physician reimbursement, President's FY 2012 budget

Doctors Avoid Medicare Pay Cut for Another Year—but Then What?

Senate leaders reached an agreement Monday to delay cuts to physician reimbursement rates under Medicare for one year. The details of the negotiations have yet to be ironed out, but if the deal makes it through Congress, doctors will avert a 23 percent pay cut scheduled for January 1.

Heritage health policy expert Bob Moffit explains in a recent post that the Sustainable Growth Rate (SGR) formula, enacted in 1997, arbitrarily ties Medicare physician reimbursement to the overall performance of the economy, meaning that when payments grow faster than the economy, automatic reductions go into effect.

In theory, that is. Congress has continually delayed the reductions to avoid reducing seniors’ access to health care. (This delay is known as the “doc fix.”) As reimbursement rates drop, more physicians become inclined to limit the number of Medicare patients they see. Some are even forced to stop accepting Medicare altogether. As Congress continues to stop the cuts from going into effect, they accumulate, so failure to act now would serve doctors a crippling 23 percent pay cut in 2011. (Read the rest at The Foundry)

Tags: doc fix, Medicare, ObamaCare, Ryan Roadmap, Senate deal, Sustainable Growth Rate

Congressional Gimmicks leave Doctors and Taxpayers in a Lurch

The Senate voted 45-52 yesterday to oppose the $140 billion so-called “extenders bill” (HR 4213). The Hill is reporting that Sen. Max Baucus (D-MT) is going to offer a slimmed down version for consideration as early as today. Two key health provisions of the bill are expected to be a continued bailout of state Medicaid programs and a temporary Medicare ‘Doc Fix’.

The Sustainable Growth Rate (SGR), initiated in 1997, links the increase in Medicare reimbursement rates to growth in GDP. Since medical costs historically increase at a rate more than twice GDP, the SGR reduces the real payments physicians receive. A temporary “fix” has happened nine times in nine years to increase Medicare rates above SGR levels. Temporary fixes are the easy way out for politicians because they appear less costly to budget.

The Hill reports that Senator Baucus is going to use a budgetary trick by paring down the “doc fix” from 19 months to 6 months. Of course, this means that the budgetary cost of the bill will appear smaller, but in reality the only difference is that Congress will have to revisit this issue in 6 months instead of 19 months – kicking the can down the road once again. (more…)

Tags: doc fix, federal spending, Medicare, Patient Protection and Affordable Care Act, Sustainable Growth Rate, tax extenders bill

Paying for Obamacare: Kicking the Can Down the Road to Future Generations

Health care reform was supposed to lower health care spending while expanding access for the uninsured. Instead, though Obamacare will cost taxpayers trillions, it will do little to address the rising cost of care. The government overhaul will not only have large and immediate negative effects for Americans of every ilk, but will have severe implications for future generations, amassing more federal debt to kick down the road to tomorrow’s taxpayers. In a recent paper, Heritage expert James Capretta lays out the several ways in which Obamacare will add to, rather than reduce, federal deficits:

– Omission of the “Doc Fix”: “The Obama Administration and leaders in Congress chose to use all of the tax hikes and spending cuts they could find to create another new entitlement instead of paying for a fix for Medicare physician fees.” According to Capretta, the cost of the doc fix will fall between $250 and $400 billion over a decade.

– Double-Counted CLASS Act Savings: The CLASS Act creates a long-term insurance program where enrollees must pay premiums for five years prior to receiving benefits. Writes Capretta, “premiums paid by enrollees build a small surplus—about $70 billion over 10 years according to CBO—which the health law’s proponents claim as deficit reduction. But these premiums will be needed in short order to pay actual claims.” (more…)

Tags: CLASS Act, doc fix, double-counting, Medicare cuts, ObamaCare, underestimated coverage loss

Obamacare’s True Costs Coming to Light

Remember how President Barack Obama promised that his health care plan would reduce the deficit and put us on a path towards fiscal responsibility? Remember how Congress kept gaming the system to come up with the Congressional Budget Office (CBO) score that could justify those claims? Well, now that Obamacare has become (hopefully only temporarily) the law of the land, the CBO is singing a slightly different tune. Last Friday CBO Director Doug Elmendorf wrote on his blog:

“The central challenge is straightforward and stark: The rising costs of health care will put tremendous pressure on the federal budget during the next few decades and beyond.”

“In CBO’s judgment, the health legislation enacted earlier this year does not substantially diminish that pressure. In fact, CBO estimated that the health legislation will increase the federal budgetary commitment to health care (which CBO defines as the sum of net federal outlays for health programs and tax preferences for health care) by nearly $400 billion during the 2010-2019 period. Looking further ahead, CBO estimated that the legislation would reduce the federal budgetary commitment to health care in the following decade—if the provisions of the legislation remain unchanged throughout that entire period.”

(more…)

Tags: CBO, CBO Director Doug Elmendorf, CLASS Act, doc fix, job-based coverage, Medicare cuts, ObamaCare