Wednesday, November 9, 2011

Congress and the "Doc Fix"

On January 1, 2012, a 27.4 percent cut in Medicare payment rates to physicians will take place unless Congress does something to stop it according to Health Affairs and the Robert Wood Johnson Foundation’s latest “Health Policy Brief”. The brief examines the various proposals and their possible effects on federal spending and on healthcare providers.

As the deadline approaches, Congress, the Administration, and other government entities are deciding whether to pass another short-term “doc fix” or find a longer term solution while weighing the impact any plan will have on the federal deficit.

More than one million providers of vital health services including physicians, limited license practitioners such as podiatrists, nurse practitioners, and physical therapists are paid under the Medicare Physician Fee Schedule (MPFS).

Under current law, providers will face steep across the board reductions in payment rates, based on a formula referred to as the “Sustainable Growth Rate” (SGR) that was adopted in the Balanced Budget Act of 1997. The “Health Policy Brief” discusses the proposals on the table that would replace the formula.

In a statement released by Donald M. Berwick, M.D., CMS Administrator, “We need a permanent SGR fix to solve this problem once and for all. That’s why the President’s Budget and his Plan for Economic Growth and Deficit Reduction calls for permanent, fiscally responsible reform and why we are committed to working with Congress to achieve a permanent and sustainable fix.”

Congress is awaiting recommendations from the Joint Select Committee on Deficit Reduction or what is referred to as the “Super Committee”. Depending on what happens, it is possible that Congress will pass another short-term fix before the year’s end to prevent rate cuts from taking effect in 2012. Under current budget rules, putting off the cut yet again would not require any immediate offsetting savings elsewhere in the budget. However, the overall cost of postponing the repeal of the SGR formula becomes higher every year.

To view the full policy brief on the topic, go to