Among the must-do issues on Congress’ end of year list is the "doc fix" – billions of dollars needed to avert drastic rate cuts for physicians who treat Medicare’s 48 million beneficiaries.
For doctors, the nail-biter has become a familiar but frustrating rite. Lawmakers invariably defer the cuts prescribed by a 1997 reimbursement formula, which everyone agrees is broken beyond repair. But the deferrals are temporary, and the doc fix has become increasingly difficult to push through a divided and deficit-wary Congress. Last year, Congress delayed scheduled cuts five times, with the longest patch lasting one year.
The script is no different heading into 2012. Should lawmakers fail to reach agreement before returning home for the holidays, a half million doctors will face a 27 percent cut beginning Jan. 1. Although Democratic and Republican leaders have pledged to stop that from happening, they disagree over how to offset the costs of a fix. While there is little doubt some agreement will be reached, a deal could be delayed until early 2012.
Here are some answers to frequently asked questions about the doc fix.
Q: How did this become an issue?
Today's problem is a result of yesterday's budget panacea – a 1997 deficit reduction law that called for setting Medicare physician payment rates through a formula based on economic growth. For the first few years, Medicare expenditures did not exceed the target and doctors received modest pay increases. But in 2002, doctors reacted with fury when they came in for a 4.8 percent pay cut. Every year since, Congress has staved off the scheduled cuts. But each deferral just increased the size – and price tag – of the fix needed the next time.
The formula also reinforces what many experts say are some of the worst aspects of the current fee-for-service system – rewarding doctors for providing more tests, more procedures and more visits, rather than for better, more effective care. In an Oct. 14 letter to lawmakers, the Medicare Payment Advisory Commission (MedPAC), which advises lawmakers on Medicare payments, called the formula "fundamentally flawed" and said it "has failed to restrain volume growth and, in fact, may have exacerbated it."
Q. Why don’t lawmakers simply eliminate the formula?
Money is the biggest problem. It would cost about $300 billion to stop the doc fix cuts over the next decade and Congress can't agree on where to find that kind of cash. Some lawmakers, including Sen. Jon Kyl of Arizona, the Senate Republican whip, have proposed using money saved from winding down the wars in Iraq and Afghanistan to finance a permanent fix. While the idea has found favor among some Democrats, other Republicans oppose it.
For physicians, the prospect of facing big payment cuts is a source of mounting frustration. Some say the uncertainty led them to quit the program, while others are threatening to do so. Still, defections have not been significant to date, according to MedPAC. Physician groups continue to lobby Congress to enact a permanent payment fix.
Q: What do experts recommend?
In October, MedPAC recommended eliminating the formula without increasing the deficit by cutting fees for specialists and imposing a 10-year freeze on rates for primary care physicians. That proposal was strongly opposed by health industry groups, as well as the American Medical Association (AMA).
The AMA has recommended a five-year transition fee scale that allows time to test new payment approaches, including several being tested as part of the 2010 health care law.
Several other options have been offered to fix the reimbursement scheme, including proposals by Rep. Allyson Schwartz, D-Pa., and the White House, but none has generated strong bipartisan interest.
Q: What happens next?
The Republican-led House passed a complex tax bill Dec. 13 that would extend doctors' payments for two years at a cost of $38 billion. But that measure, which also includes the payroll tax break requested by President Obama, faces challenges in the Senate, where Democrats object to several provisions, including paying for the doc fix by cutting programs established by the 2010 health law and reducing Medicare and Medicaid payments to hospitals.
Some health care lobbyists suggest the Senate may go for a one-year fix, but there doesn't seem to be consensus about what to do next. Since there are other major conflicts between the chambers on this bill, including the House's approval of the controversial Keystone XL pipeline project, a physician payment compromise may be difficult to find. The White House has threatened a veto of the House Republican bill.
Lawmakers don't have much time to reach common ground on the issue. Both the Senate and House are eager to break for the holidays and the current financing ends Dec. 31, well before they return to work. In the past when hitting such scheduling troubles, Congress has often opted for stop-gap extensions. If no deal is reached by Jan. 1, the agency that oversees Medicare would likely tell physicians to delay submitting claims in the expectation that Congress would pass a fix when it returns later in the month.
-- Compiled by Mary Agnes Carey, Carol Eisenberg and Lexie Verdon
Source: feeds.kaiserhealthnews.org
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