A closer look at latest 'doc fix'

Published on January 4, 2013 at 6:55 AM · No Comments

As part of the fiscal deal, a scheduled cut in Medicare physician payment rates was postponed -- but its 10-year price tag is being borne by other health care players, especially hospitals.

CQ HealthBeat: Sectors Hit By 'Doc Fix' Offsets May Keep Taking Their Lumps
As anxious as their advocates might be to see the Medicare and Medicaid payments cut by the fiscal cliff measure now awaiting President Barack Obama's signature restored, health care sectors that felt the budget blade could be in for a few more whacks in the coming months. The cuts in the fiscal cliff measure the Senate and House cleared this week offset the $25 billion cost over 10 years of continuing current Medicare physician payment rates through the end of 2013. But other cuts may be coming as lawmakers move to reduce deficit spending. Hospitals, for example, took about $15 billion in cuts to Medicare inpatient payments stemming from bill coding practices and reduced Medicaid "disproportionate share" payments to treat poor patients (Reichard, 1/2).

The Medicare NewsGroup: Docs Have Lived Under SGR Since '97, And Threats Of Cuts For A Decade
The SGR worked okay in the late 90s and early 2000s, when the economy was growing fast. During this time, physicians received significant increases in their payment updates. In 2002, the economy slowed and the SGR began turning out negative numbers. Congress let the cuts go into effect the first year (a 4.8 percent cut), but since then, they've passed legislation to defer the cuts. The SGR is cumulative, so cuts have grown from year to year. Congress is now afraid to permanently repeal the SGR because without it, they fear there will be no control whatsoever on the volume and intensity of physician services, [Stuart Guterman, vice president and executive director of the Commission on a High Performance Health System at The Commonwealth Fund] said (Sjoerdsma, 1/2).

The Medicare NewsGroup: Docs Spared From Fee Cuts In Fiscal Cliff Deal, But Say Permanent Fix Needed
There's bi-partisan agreement that the SGR formula, passed into law with the Balanced Budget Act of 1997, is flawed. Congress has passed 12 short-term patches since 2003 to keep the formula from going into effect. The Medicare Payment Advisory Commission (MedPAC), the group of experts who advise Congress on Medicare payments, has said that Congress has two options for dealing with the problem. Option one: Repeal the SGR and accelerate adoption of new payment models that improve quality and lower costs. Option two: Tweak the SGR or replace it with a new spending target. In option two, Congress should still experiment with new payment models (Sjoerdsma, 1/2).

The Medicare NewsGroup: A Look At Medicare Costs And Cuts In The Fiscal Cliff Deal
The "doc fix" included in the American Taxpayer Relief Act of 2012 averts a 27 percent pay cut slated to hit doctors on Tuesday due to the sustainable growth rate. But the $30 billion price tag of that patch is offset in the bill by cuts in reimbursement to other Medicare providers over the next ten years. Hospitals will fare the worst, picking up nearly 50 percent of the tab. Below is a detailed breakdown of the bill's Medicare provisions, and how they impact spending compared to the CBO's "current law" baseline (Solana, 1/2).

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