Congress Watch: Obamacare and the “Doc Fix.”

(Joe Jansen has a decade and a half of experience working as a staff member on Capitol Hill.  He has worked in almost every legislative capacity in both the House and Senate. Congress Watch will be weekly feature for TPA.) The Sustainable Growth Rate (SGR) was enacted as part of a deficit reduction law in 1997.  The SGR formula contains costs by linking Medicare payments to physicians with overall economic growth.  If payments in one year go over a target rate, then physician payments the next year are decreased.  The SGR formula worked for a few years.  But, when economic growth slowed and health care costs rose dramatically, it became a recipe for disaster.

In every year since 2002, the SGR formula has called for a reduction in Medicare physician payments.  Only once has that reduction actually been allowed to occur.  Beginning in 2003 Congress began passing legislation to prevent the cuts.  These stopgap measures, referred to as the “doc fix” have cost around $150 billion so far.

Near universal agreement exists that the formula is flawed.  Physicians and others have been calling for a permanent fix for a decade or more.  Health care providers are faced with uncertainty each time a temporary fix is set to expire.  Congress will not allow a payment reduction to occur because that would encourage doctors to stop seeing Medicare patients, threatening seniors with a loss of access to medical care.  While each of the short-term fixes is expensive, it is easier to continue kicking the can down the road than to resolve the issue once and for all.

This year, a bipartisan solution to fix the SGR has been reached.  The House considered its version of the bill last week.  Under the House bill, the SGR would be repealed and replaced by a new payment system that rewards quality of care over the volume of procedures performed.  As the transition to the new system occurs, health care providers would see small annual increases in their payment rates.

While most everyone agrees with the method of fixing the SGR, the problem arises when it comes to actually paying for it.  The Congressional Budget Office (CBO) estimates that this fix will cost between $120 billion and $150 billion over ten years.  The House offset the costs by repealing Obamacare’s individual mandate for five years.  That is not a viable solution in the Senate.

Meanwhile, the latest doc fix expires at the end of March.  With both the House and Senate away from Washington this week, there is very little time to work out a resolution to this issue.  Ultimately, Congress will do what it usually does.  It will kick the can down the road a little bit farther, leaving physicians to wonder if this flawed system will ever get fixed and increasing the chance that the cost for ultimately fixing this problem will continue to rise.