A Big GOP Win Could Fix Medicare Pay Cut

A big win by Republican candidates in the November election may help quickly resolve the Medicare “doc fix” issue, according to a recent report by the congressional daily The Hill.

Unless Congress acts, physicians could face a 23.5% cut in Medicare payment rates on Dec. 1, and an additional 6.1% reduction on Jan. 1.

Physicians groups have been demanding a 13-month delay in implementing any reduction in Medicare reimbursements, and urging lawmakers to pass a longer-term fix to make Medicare reimbursements more equitable. But The Hill reports that such changes would add as much as $330 billion to federal spending over the next 10 years, according to estimates by the Congressional Budget Office.

Some now say a Republican victory in November would hasten the “doc fix,” believing that newly elected Republicans would be eager to agree to a costly change in Medicare reimbursements and then pass the blame for it onto outgoing Democrats.

In July, the House voted to once again delay the mandated cut in Medicare fees, pushing the debate over changes to the sustainable growth rate (SGR) to late November. (The SGR links Medicare reimbursement rates to the U.S. gross domestic product. With healthcare spending far surpassing GDP growth, the formula requires drastic cuts in reimbursements.) It was the 10th time a decision was delayed on the so-called doc fix. Instead, lawmakers gave physicians a 2.2% rate increase, retroactive to June 1, which is set to expire on Nov. 30.

What options do lawmakers have to change the current policy? In July, the journal Health Affairs published a health-policy brief that offered some suggestions. Among them:

• Do nothing and let scheduled Medicare pay reductions go into effect this year, thereby reducing physician payments by as much as 40% from 2009 levels.
• Abandon the SGR formula altogether, or at least put off implementing it for a few years, which could raise the deficit by as much as $89 billion by 2014, according to Health Affairs.
• Modify, or “rebase,” the current SGR formula to reduce or eliminate spending targets.
• Make other payment reforms instead, such as paying physicians less for “overvalued” services, where reimbursements are reduced when the price charged is deemed too high relative to the difficulty of providing the service, or the physician’s overhead costs.