Senate Passes Medicare “Doc Fix”

The Senate finally passed a fix for Medicare payments late on Friday but doctors remain disappointed that they still could not pass a permanent fix for the flawed payment formula due to objection from Republicans. At least this fix extends for six months and, besides preventing an automatic 21 percent pay cut, provides for a 2.2 percent increase. Congressional Democrats have been trying to achieve a permanent fix since last year but the Republicans have successfully blocked every attempt.

Medicare payments were held through yesterday in hopes that the fix would be passed by then. Payments began to be issued today based upon the reduced fee schedule with the increased amount to be paid retroactively once the bill becomes law.  I can recall one time in past years in which this happened. Besides forcing Medicare intermediaries to process the extra payments, this creates extra book keeping headaches for physician offices which must post payments twice and change billings for patient co-payments.

The bill still must pass the House and be signed by President Obama. It is not clear how soon this will be completed and whether Medicare will continue to send payments at the lower amounts or again hold payments pending final passage.

ABC News reviewed the history of the Medicare payment formula:

The cuts in reimbursement stem from a payment formula based on the sustainable growth rate, or SGR, a program Congress set up in 1997 that tied the payments doctors received for treating these patients to the nation’s gross domestic product. But even though the cuts were scheduled to take effect at the turn of the millennium, a series of quick fixes have pushed the schedule back.

Congress has instituted such delays nine times over the past eight years, most recently last April.

When it was implemented, the formula was well intentioned, said Stuart Guterman, assistant vice president at The Commonwealth Fund, an independent research organization. But since then it has misfired, because it doesn’t focus on the reasons behind the rise in spending and specific services that are overpriced.

It’s that formula that needs to be fixed to make the program sustainable, medical professionals concur, rather than simply imposing temporary fixes to override the payment cuts without addressing the root causes of the growth in expenditures.

“We’re left with a choice between a temporary fix that just ‘kicks the can down the road’ without fixing the underlying problem and a 21 percent across-the-board cut in physician fees that would cut primary care as well as specialty care, distort incentives, hurt beneficiaries, and severely damage the credibility of the Medicare program,” Guterman told ABC News. “The recurring cuts in physician fees produced by the SGR formula must be eliminated in order to achieve effective payment and delivery system reforms.”

But many lawmakers are concerned about the costs associated with such a fix. The Congressional Budget Office estimates that over the next two years, such a fix would tack an additional $22 billion to the federal deficit.

While on paper this does add additional money to the deficit, in reality Congress has been passing bills to override the payment cuts for several years and a permanent fix would represent this reality as opposed to adding spending which was not already expected.

The news was not all good today. While it is good news that we won’t have to worry about this for another six months, I fear even greater gridlock next year assuming the Republicans pick up more seats in November. In addition, the Democrats were unable to pass extension of unemployment benefits over Republican opposition.

Republicans Block Medicare Payment Fix

The overall Republican strategy seems to screw up as many things as possible and then try to blame the Democrats. Conservatives have been falsely claiming that ObamaCare is forcing doctors to stop accepting Medicare when it has actually been the Republicans who are to blame. Under the current flawed payment formula, unless Congress votes to override the formula doctors will receive a 21% cut. As action from Congress is required to prevent this, Republicans can (and on several occasions in the past several months have) block passage of bills to prevent the automatic cut despite being in the minority.

Medscape reports that Republicans once again blocked efforts to prevent cuts which technically began on June 1, but which have been postponed by delaying processing of claims so far this month:

In a last-minute shock to physicians, the Senate voted today against postponing a scheduled 21% reduction in Medicare reimbursement to physicians and other health providers.

A compromise proposed by Sen. Max Baucus (D-MT) was defeated largely along party lines, with no Republican support. The compromise was put forward after the Senate had rejected a $140 billion finance package yesterday that would have delayed the cut in Medicare payments to physicians until 2012, along with measures to extend unemployment benefits and provide $24 billion to states to cope with their Medicaid programs.

The lower-spending compromise bill, dropping the total cost to $118 billion and the overall deficit impact from $79 billion to $55 billion, would have delayed the planned Medicare cuts and provided a 2.2% raise for physicians through November 30, rather than for the 19 months mandated by the earlier bill.

It still was not enough, however, to win over the 60 senators needed to end debate on the issue under Senate rules. Fifty-six senators voted in favor, with 40 opposed. Opponents argued that the overall measure was not offset by spending cuts and added too much to the deficit.

Barack Obama had urged Congress to avoid these cuts in his weekly address last Saturday:

More than a decade ago, Congress set up a formula that governs how doctors get paid by the Medicare program.  The intent was to slow the growth of Medicare costs, but the result was a formula that has proposed cutting payments for America’s doctors year after year after year. These are cuts that would not only jeopardize our physicians’ pay, but our seniors’ health care.

Since 2003, Congress has acted to prevent these pay cuts from going into effect. These votes were largely bipartisan, and they succeeded when Democrats ran Congress and when Republicans ran Congress – which was most of the time.

This year, a majority of Congress is willing to prevent a pay cut of 21% — a pay cut that would undoubtedly force some doctors to stop seeing Medicare patients altogether. But this time, some Senate Republicans may even block a vote on this issue. After years of voting to defer these cuts, the other party is now willing to walk away from the needs of our doctors and our seniors.

Now, I realize that simply kicking these cuts down the road another year is not a long-term solution to this problem.  For years, I have said that a system where doctors are left to wonder if….

… they’ll get fairly reimbursed makes absolutely no sense.  And I am committed to permanently reforming this Medicare formula in a way that balances fiscal responsibility with the responsibility we have to doctors and seniors.  In addition, we’re already taking significant steps to slow the growth of Medicare costs through health insurance reform – not by targeting doctors and seniors, but by eliminating 50% of the waste, fraud, and abuse in the system by 2012.  This not only strengthens Medicare, it saves taxpayer dollars.

I’m absolutely willing to take the difficult steps necessary to lower the cost of Medicare and put our budget on a more fiscally sustainable path. But I’m not willing to do that by punishing hard-working physicians or the millions of Americans who count on Medicare. That’s just wrong. And that’s why in the short-term, Congress must act to prevent this pay cut to doctors.

If they don’t act, doctors will see a 21% cut in their Medicare payments this week. This week, doctors will start receiving these lower reimbursements from the Medicare program. That could lead them to stop participating in the Medicare program. And that could lead seniors to lose their doctors.

We cannot allow this to happen. We have to fix this problem so that our doctors can get paid for the life-saving services they provide and keep their doors open. We have to fix this problem to keep the promise of Medicare for our seniors so that they get the health care they deserve. So I urge Republicans in the Senate to at least allow a majority of Senators and Congressmen to stop this pay cut.  I urge them to stand with America’s seniors and America’s doctors. Thanks.

Republicans have suddenly become concerned about the deficit after running the government on credit while in power. Not only have they been blocking modest increases in payments, they have blocked efforts at simply keeping Medicare payments at current levels.

Update: Senate Passes Six Month Fix