Some things happen every year because legally or practically, they just have to. The president submits a budget request to Congress every year because the law requires him to do so. The Constitution calls for the president to apprise lawmakers of the “State of the Union” from time to time, which has, by custom, turned into an annual address near the beginning of each session of Congress.
Then there are things that happen every year even though they don’t have to — or clearly shouldn’t. That includes the annual crisis over adjusting the payments to Medicare providers, which is now looming again over Capitol Hill. Unless Congress takes action by the end of the month, reimbursement levels will drop by 21 percent.
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The issue was born with the Balanced Budget Act of 1997, an omnibus spending bill that included a provision meant to keep Medicare payments in line with economic growth every year by applying a “sustainable growth rate,” or SGR, adjustment to them. The SGR calculation was, to put it plainly, catastrophically wrong. It would have cut payments so sharply that physicians would have started refusing to see Medicare patients, creating a crisis that nobody in Congress wanted to be blamed for.
So the so-called “Doc Fix” was born. It’s a measure that temporarily suspends the SGR adjustment. Congress has now been “temporarily” suspending it for more than a decade.
Leaving SGR on the books and correcting it on an emergency basis every year causes real problems. Not only does it create unnecessary stress and uncertainty for the medical profession, it also screws up federal budget accounting.
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The Congressional Budget Office, when assessing federal spending, is generally constrained by the law as it is written. So, when CBO looks at the Medicare program, it is required to assume that the SGR will be applied as the law requires, resulting in drastically lower costs than the program will actually incur.
The biggest barrier to actually fixing the SGR problem permanently is money. Over a 10-year budget window, keeping physician payments through Medicare competitive will cost a lot. A proposal that passed the House of Representatives last year would cost $215 billion over 10 years. It’s money that we are going to spend anyway, but Congress hasn’t been willing to bite the bullet and pass legislation admitting that reality. The yearly fixes, with all the problems they cause, are less painful politically because of the artificially smaller price tag.
Ironically, the Doc Fix process has, at least, helped to reduce the federal deficit somewhat. The annual adjustments to doctors’ reimbursement have, unlike many things Congress does, been largely paid for by making other cuts to health care spending.
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Nevertheless, budget watchdogs continue to call, every year, for the enactment of a permanent doc fix. Will this be the year? A current deal being considered in the House of Representatives would repeal the Doc Fix, pairing it with a two-year extension of the Children’s Health Insurance Program, at a cost of more than $200 billion over 10 years, according to a report from Modern Healthcare on Friday afternoon.
Whether a deal is truly in sight or not is questionable. According to this latest report, the deal would offset only about $70 billion of the cost through reductions in other spending. That leaves a minimum of $130 billion that would be added to the federal budget over the next 10 years, with the total only growing after that.
Getting that kind of a spending increase through the House of Representatives would require House Speaker John Boehner (R-OH) to cut a deal with Democrats in order to advance the bill without help from his party’s strongest deficit hawks. Boehner, who is already on thin ice with the conservatives in the House for folding on a controversial Department of Homeland Security funding bill earlier this month, would be taking a real political risk with such a move.
The bill would also need to get through the Senate, where conservative hardliners would no doubt object strenuously to the bill’s addition to the deficit.
In a recent report, the Committee for a Responsible Budget called on Congress to implement a permanent fix, perhaps along the lines of the bill passed by the House last year. “The replacement would represent a marked improvement to Medicare’s payment system,” the report found, “better rewarding high-quality and more coordinated care, rather than simply the number of services provided.”
Hope springs eternal.
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