Liberal Values Defending Liberty and Enlightened Thought

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.