Reforming Medicare Physician Payments – aka the “Doc Fix”

Reforming payments to Medicare physicians is a legislative issue that has bipartisan support on Capitol Hill. Every year, Congress passes a “patch” to the Sustainable Growth Rate formula used by the Centers for Medicare and Medicaid (CMS) services to control Medicare spending so that doctors’ reimbursements are not cut. The Engelberg Center for Health Care Reform held an expert panel discussion on the likelihood of congressional action now, and options for replacing the system.

The event included doctors, scholars, and policymakers, including Dr. Mark McClellan, an Engelberg senior fellow and former CMS administrator; and Rep. Michael Burgess (R-TX), vice-chairman of the House Energy and Commerce Health Subcommittee (and also a medical doctor). Here is a sample of what they said at the event. Go to the event’s page for full event video and audio.

Dr. McClellan: “The usual last minute fix … doesn’t really fix the problem … Physician payments are expected to become even more squeezed if there isn’t a change to the process.”

Rep. Burgess: “Fee for service is an anachronism. … If you don’t fix the SGR, there are a certain number of doctors of a certain age who will be headed for the exit.”

Dr. Farzad Mostashari (Engelberg Center visiting fellow): “If we’re talking about alternative payment methods we have to think about physicians and physician-owned practices participating in that.” 

Mark Wager (president, Heritage Medical Systems): “The whole idea that the system will collapse if you move away from fee for service is complete bunk.”

Dr. Darshak Sanghavi (Engelberg Center fellow): “The amount we actually pay for services has not changed and yet the cost per beneficiary has increased.”

Following their remarks, a panel of Senate and House committee staff members from both minority and majority sides engaged in a discussion, moderated by Visiting Scholar John O’Shea, on the legislative process.

What is Medicare physician reform, aka “the doc fix”?

Dr. Kavita Patel, one of the event panelists who is also a physician and fellow in the Engelberg Center, explained it this way in a recent Brookings podcast:

This is a perennial thorn in legislators’ sides. This is the issue called the “doc fix” … also known as the Sustainable Growth Rate—the SGR. And all of this is around the formulas used to pay doctors for Medicare beneficiaries. And every year, because of the growth in cost and the growth of inflation … because of the growth of health care costs, we are supposed to adjust how much we pay doctors by decreasing that amount in doctors’ reimbursement. And of course that makes every doctor say “if you decrease how much you pay me for Medicare patients I’m not going to see Medicare patients anymore.”

So as a way to avoid this we’ve used every year what we call the “doc fix” to reverse the legislatively mandated decreases in Medicare reimbursement. … And every year doctors come to lobby on Capitol Hill and say “please do not cut our payments in Medicare,” and every year Congress has to put through a patch to actually avoid a cut for the next year. The reason they can only do a year at a time is because it costs money. Anytime you avoid cutting doctor’s payments, you’ve got to backfill what you avoided with some compensation to the system. So, it costs money to do these patches and everybody is sick and tired of it.

Visit the Engelberg Center for Health Care Reform for more research on health care issues.

Colleen Lineweaver contributed to this post.