About that "Doc Fix"

By John Ballard

"Doc Fix" is a term being kicked around again because if Congress fails to address the issue the rates Medicare pays doctors are scheduled to take a draconian hit December 1.
Yes, that's less than two weeks away. And the possibility of a cut in reimbursements is why some doctors are announcing they will no longer accept Medicare patients.

They have a point. This is a wrinkle in the Medicare fabric with a long bipartisan history which, like so many, has its origin in Republican good intentions. This summary from Exra Klein is over a year old but not much has changed, other than the way Congress has kicked the can down the road a couple more times.

This is an extremely strange paragraph from Dana Milbank:

Senate Democrats wanted to protect doctors from scheduled cuts in Medicare payments over the next 10 years, but there was a problem: Doing so would add a quarter of a trillion dollars to the federal deficit, making mincemeat of Obama's promise. So Democrats hatched a novel scheme: They would pass the legislation separately, so the $250 billion cost wouldn't be part of the main reform "plan," thereby allowing the president to claim that that bill wouldn't increase the deficit.

"Novel scheme?" The "Sustainable Growth Rate" in Medicare was passed by a Republican Congress in 1997 that wanted to ensure Medicare's costs didn't rapidly outpace economic growth. In 1997, that seemed like a plausible thing to do: Health-care costs grew by 4.7 percent that year, and the GDP also grew by 4.7 percent. The linkage seemed natural.

The problem was that the 90s were an aberrant period of low health-care cost growth and high GDP growth. In 2002, for instance, health-care spending grew by 8 percent while the GDP grew by 1.8 percent. The formula embedded in the Medicare Sustainable Growth Rate would have triggered huge cuts to doctors, and broad outrage among seniors. And thus began the era of "temporary" fixes to Medicare payment. The SGR law stayed on the books, but Congress began routinely invalidating its scheduled cuts to doctor payments.

The first was passed in 2003, when Republicans controlled the House, the Senate, and the White House. The next came in 2005. Then there was one in 2006. The next year, Democrats took control of the Congress. They passed fixes in 2007 and 2008. The neat trick of this is that it also made the deficit look smaller than it was, as it kept getting estimated as if Congress was going to allow a 30 percent cut in doctor's reimbursements sometime in the future, saving hundreds of billions of dollars. That was never going to happen, of course, but it made Bush's budgets look better.

Now it's 2009, and rather than passing a temporary fix to the program, Democrats are trying to rewrite the program's formula so it reflects the actual behavior of Congress. Milbank calls this "novel," and I guess it is. But not in the way that he implies. Passing bills to "delay" doctor's cuts is a proud, bipartisan tradition in this town. Pretending that it's some Democratic innovation is simply wrong. The only thing that's novel is that the Democrats are trying to solve this problem all at once, and facing down a huge price tag to do so. It would be easier for them to stick with recent congressional practice and pass a small bill putting the problem off for one more year, and one more Congress, as the very Republicans who are criticizing them now did in 2003, 2005 and 2006.

My bold. This is nothing new. But with Medicare rates soon to be controlled by IPAB it is one political hot potato both parties should be happy to get rid of as technocrats and experts will become the new whipping boys. Of course Congress will be responsible for approving their appointments, but those are picky details when dealing with pissed off constituents. (And part of the reason so many people believe "government can't do anything right." Never mind if there is not enough money to be had somebody has to make hard choices.)

The notion that the way to curb health care costs by paying less is as misguided as refusing to pay any other bill. When providers refuse to cooperate, in the place of expensive health care you get none at all. A central part of PPACA is a variable fee schedule which rewards both better outcomes and lower per capita costs, using medical home and ACA models. If those who want to torpedo the new approach succeed the "doc fix" may be around for years to come. But hopefully it will vanish, replaced by more rational rate structures.

It should be noted, incidentally, that not everyone in the medical community will be happy even when the dust settles. We can expect to see a serious shake-out of the system in the next few years with public programs (Medicare and Medicaid) providing a safety net for everyone, and those with enough assets having access to the same Cadillac insurance plans and elective procedures they have come to expect. Lifestyles at the top will see little change. But those at the bottom will have a level of protection that can only be provided by a responsible social contract.