End of the "Doc Fix" Era?

Published Tuesday, September 24, 2013
by Marjorie Vanderbilt, Deputy Executive Director/Director, Government Affairs

Now that Congress has returned from its five-week summer recess, it is anticipated that, prior to the end of this year, it will act on a bill that would block cuts to Medicare’s physicians payments on January 1. The question is whether lawmakers will pass a temporary fix, as they have for the past ten years, or whether they will finally make this the year they agree on a comprehensive solution. 

House Energy and Commerce Committee members have made more long-term progress on a long-term growth rate measure than Congress has seen in years, although the bill’s sponsors acknowledge that the legislation is far from finished. The House Ways and Means Committee and the Senate Finance Committee also plan to introduce their own bills this fall. Congress seems closer than ever to instituting a new Medicare payment system, but several obstacles stand in the way of getting a bill to the president’s desk by the end of the year. If that fails, Congress will be pressed to come up with another short-term solution or physicians will see their payment rates reduced by approximately 25 percent on January 1.

The Energy and Commerce bill, the only official measure so far, would repeal the sustainable growth rate (SGR) formula and replace it with an enhanced fee-for-service system, while also allowing providers to opt out and participate in alternative payment models. The bill, approved unanimously by the committee in July, would first institute a five-year period of stable payments, to allow certainty while physicians adjust for the new payment models. After that, physicians would participate in either an enhanced fee-for-service system or in approved alternative payment systems. 

At this point, it is unclear how similar the House Ways and Means Committee and Senate Finance Committee bills will be to the Energy and Commerce Committee’s proposal. The more the three bills differ, the more difficult the measures will be to reconcile. 

By far the biggest question, however, is how to offset the price tag of a comprehensive measure. The Congressional Budget Office estimates that repealing the current formula for ten years would cost $139.1 billion, and there could be additional expenses associated with implementing the bill’s new payment system. So far, House members have avoided discussions on how to pay for the measure approved by the Energy and Commerce Committee, focusing instead on crafting a payment structure that has bipartisan support. House Democrats have vowed to oppose any bill that includes offsets such as significantly raising costs for Medicare beneficiaries.

In addition, House Ways and Means Committee Chairman Dave Camp (R-Michigan) has been working with Senate Finance Committee Chairman Max Baucus (D-Montana) on a legislative package overhauling the tax code. As their committees also have jurisdiction over the Medicare payment issue, it is possible that their leaders will agree to include some type of physician payment reform in the tax package.

The window for a long-term solution for Medicare’s physician payment system is certainly open. Whether Congress will be able to agree on a solution by the end of this year is an open question.

AAGP strongly supports efforts to enact a long-term correction of the Medicare physician payment formula and is continuing to work with members of Congress and other organizations to achieve that goal at the earliest possible date.