Lawmakers are moving toward a permanent fix to Medicare’s flawed physician payment system that would completely transform the way the government pays doctors.
House and Senate Committee leaders unveiled a measure last week that would repeal Medicare’s sustainable growth rate formula—the current and outdated model used to determine how much to pay Medicare doctors.
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Both lawmakers and health experts agree that the current formula, which has been in place since 1997, is unsustainable. Since Medicare spending has exceeded the target every year since 2003, doctors have been left vulnerable to major pay cuts.
In order to avoid that, Congress routinely uses the so-called “doc fix” to approve extra funding for doctors’ pay in order to keep provider payments stable amid budget shortfalls. Last year, for example, lawmakers passed a $30 billion doc fix to avoid decreasing Medicare physicians’ pay by 26.5 percent. Those costs were instead shifted to hospitals. This year, if Congress fails to pass a doc fix or permanent bill, Medicare doctors will receive a 24 percent pay cut.
Repealing the formula would likely put an end to the expensive doc fixes that Congress has grown to rely on. The temporary fixes have cost about $150 billion in the last 10 years—almost exactly the cost of a permanent solution to the payment program, according to sponsors of the reform legislation introduced last week.
“This legislation…provides stability for physicians so they will no longer face the uncertainty of massive cuts, but also begins the process of improving how we pay for medical care to focus on positive results for seniors,” Ways and Means Chairman Dave Camp (R-MI) said in a statement.
Related: Doc Fix Will Cut Medicare Hospital Payments
The new bill, which was cobbled together by lawmakers in the Senate Finance Committee, House Ways and Means, and Energy and Commerce committees, pays doctors based on the quality of care they provide, instead of simply doling out current flat fee rates for providing services.
It uses metrics to determine the quality of care including whether doctors are hitting certain targets in order to decide what they would earn. The bill includes an additional incentive of $500 million for doctors who provide great care.
Though lawmakers have been searching for a solution to the doc fix for years, the cost of repealing the formula has prevented any real proposals until now.
Earlier this year, the Congressional Budget Office significantly lowered its estimate of the cost of repealing the formula—down from $254 billion over the next decade to $138 billion. Though the revision has breathed new life into the reform efforts, lawmakers still need to figure out how to pay for the measure.
“For the first time in many years, we have agreement among the bipartisan leadership of the three Committees that oversee Medicare,” Ways and Means Ranking Member Sander Levin, Michigan Democrat told The Washington Times. “Now, we have to turn to the thorny issues of offsets.”
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