October 20, 2014

Latest Move Threatens Reform of Medicare Doctor Payments

  • The American health care system is a patchwork of public and private programs that serve citizens in different ways, depending on their age, military...

As the April 1 deadline to avert a 24 percent cut in Medicare’s payments to physicians approaches, hopes for enacting a permanent reform to the flawed payment formula appear to be dwindling. The sustainable growth rate formula (SGR) that determines physician payments has for years called for large cuts that Congress has continually overridden (often referred to as the “doc fix”).  

House Republicans intend to bring up a vote on a doc fix bill but are threatening to attach a delay to the Affordable Care Act’s mandate for individuals to purchase health insurance. The delay in the mandate is sure to be rejected by Senate Democrats and the President. 

The Republican move would severely hamstring the bipartisan effort to reform the SGR and move doctor reimbursements away from the fee-for-service system (which encourages health care inflation) to a system that pays for value and outcomes.

Such a pathway has bipartisan support in both the House and Senate but would cost around $140 billion over 10 years. Members of Congress and staff have been working on ways to pay for the legislation, and there are many options that would strengthen and encourage needed reforms to the health care system. 

To raise enough money to fully pay for the SGR repeal, the individual mandate delay would have to last for years and would likely lead to an unraveling of the individual insurance market. Adding it to the SGR legislation now simply delays congressional action on what is our best opportunity for Medicare reform and building on the recent slowdown in health care costs.