With healthcare reform efforts on hold, Medicare ‘doc fix’ looms large again

Congress has just one month to move legislation preventing steep cuts in Medicare payments to physicians.

At the end of February, a short-term measure enacted late last year will expire, exposing doctors who treat Medicare patients to a 21 percent reduction in their fees.

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The American Medical Association (AMA) and other physician groups are continuing to lobby lawmakers to enact a costly permanent reform to the complex formula that calculates the payment levels. The AARP is supporting their efforts, as is the Military Offices Association of America (MOAA) because the Pentagon’s health program pays medical providers at Medicare rates.

In addition to their joint lobbying campaign and efforts to activate their grassroots networks, the AMA, AARP and MOAA launched a television advertising campaign in eight states last week.

The underlying problem has vexed Congress for nearly a decade, but only short-term bills have been put in place as the problem worsened and the magnitude of the annual cuts grew.

Largely because scrapping the current formula and replacing it with one that would more accurately reimburse physicians for their services would cost more than $240 billion over 10 years, Democrats severed the so-called doc fix measure from the larger healthcare bill they are still trying to move forward.

The House has already approved a bill to establish a new payment system, but the Senate version of the bill failed to pass, largely because of opposition among Republicans and centrist Democrats to the fact that the spending in the bill was not offset with budget cuts elsewhere.

But action taken by the Senate this week might have provided a path toward getting final action on the Medicare physician payment system, known as the sustainable growth rate formula, or SGR.

With the blessing of the Obama administration, the Senate on Thursday passed pay-as-you-go budgeting legislation that would require Congress to offset all new spending or tax cuts with cuts to existing spending or tax increases. The House passed a similar bill last year and is slated to take up another version next week.

Democrats maintain the pay-go law would help reduce the federal budget deficit. The bill, however, includes exemptions for several costly items, including the doc fix. Specifically, the legislation would allow Congress to spend up to $82 billion more on physician payments without offsetting the spending.

Although that figure is not enough to pay for a complete overhaul of the payment system, it could be enough to lock in fees at their current level for five years.