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What is the Medicare Doc Fix Bill and Why Does it Matter?

If you follow Medicare in the news, you may have heard about a “doc fix” bill making its way through Congress, and getting held up in the Senate. This week, we’ll talk about the purpose of the bill, why it’s delayed, and what the bill would mean for beneficiaries if it were passed in its current form.

Medicare Doc Fix Bill

What is a Doc Fix?

To understand the doc fix, we have to go back to 1997, when the then Republican Congress passed the Balanced Budget Act of 1997 and “created a payment formula meant to govern Medicare called the Sustainable Growth Rate [SGR].” The SGR factors into how Medicare determines how much it’s going to pay doctors. The goal of the SGR is to make sure annual Medicare spending doesn’t grow faster than the GDP.

In order to do this, Medicare tells Congress every year about its expenditures last year, its target expenditures, and how much it would have to pay doctors next year in order to meet the SGR. If last year’s expenditures are greater than target expenditures, payments to doctors would have to be decreased. If last year’s expenditures are less than target expenditures, payments would be increased.

For the first few years after the SGR was passed, doctors got modest increases. But in 2002, payments were cut by 4.8%, which Medicare doctors weren’t happy about. So in 2003, Congress began what is now a yearly tradition of passing a “doc fix” that ensures payments are not decreased, even if the SGR says they should be. Now in 2015, if the doc fix weren’t passed, the fee schedule would be aligned with the SGR and payments would be cut by 21%.

What’s Happening Now?

Now, after many years of temporary fixes in the form of annual adjustments, Congress is trying to get rid of the SGR altogether and pass a permanent doc fix. But since they waited so long to tackle the problem head on, they’ve got their work cut out for them. To compensate for all the years of avoiding pay cuts, doctors would see very few increases in the next few years, and a total freeze for a number of years after that. Under the version of the bill the House passed, “Medicare payments to docs would rise by 0.5% in each of the next four years – a rate that is likely to be well below inflation. Then, payments would be frozen for the next six years. After that, physicians would get modest increases again.”

Why is the Bill Delayed?

The bill made it easily through the house, but “at least one objection on the Republican side” caused the bill not to come to the floor for a vote in the Senate. The Senate is now out for a 2-week recess, but the new fee schedule is set to go into effect on April 1st. This means that because Congress didn’t pass the doc fix, the fee schedule would be aligned with the SGR, and payments would immediately be cut by 21%.

Fortunately, there are ways for the federal government to work around the deadline and prevent the cuts from taking place in the short term. The government can hold payment checks officially for two weeks, and possibly for even longer in order to wait for a bill to pass. Or it could pay doctors now, and reimburse them later for the cuts once the permanent fix is passed.

What Would the Bill Mean for Beneficiaries?

If the doc fix bill were passed in its current form, it would add $141 billion to the federal deficit over the next 10 years, and $500 billion by 2035. And according to Forbes, it could end up costing even more than that. And unfortunately, beneficiaries would have to bear some of these costs. Wealthy beneficiaries would incur more of the burden, but “Even those individuals making less than $133,500 per year will see their premiums rise…The Congressional Budget Office estimates that those premiums will increase under this bill byabout $10 by 2025 to $181 per month,” according to Yahoo Finance. Medigap deductibles would also increase.

house-medicare-budget

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