One of the least mentioned elements of the impending “fiscal cliff” is the so-called “Doc Fix.”
In 1997 Congress passed legislation known as the Sustainable Growth Rate (SGR) intended to slow the growth of Medicare spending. It didn’t.
Not to worry, Congress included a fallback mechanism: Physician reimbursements for Medicare-related services—which already pay only about 80 percent of what private insurance would pay—would be lowered the following year, offsetting the excess Medicare spending.
Except that when it came time to cut physician reimbursements—a situation that has emerged every year for about a decade—Congress voted to keep the reimbursements roughly the same. That action just meant the cut would be bigger the following year to balance it out.
Well, the cut has grown to the point that if Congress doesn’t act by the end of the year, Medicare reimbursements will drop about 27 percent. If that occurs, many doctors will dramatically reduce the number of Medicare patients they see, making it very hard for seniors to find a doctor.
The problem can be fixed—hence the term “Doc Fix”—but it won’t be cheap. A permanent solution will cost more than $300 billion at a time when the government is already borrowing more than $1 trillion a year.
House Democrats initially included money for the Doc Fix in their first iterations of ObamaCare in the summer of 2009. But the president wanted to keep the legislation’s cost under $1 trillion, so Democrats removed the provision.
Some seniors might think that if Congress doesn’t solve the Doc Fix, they’ll just pay the doctor the difference between what Medicare pays and what the doctor charges. But doing that is called “balanced billing” and it’s against the law.
A financially well-off senior might decide to just pay for the doctor’s service out of pocket and bypass Medicare completely. But that’s considered “private contracting” and is also against the law (unless the doctor forgoes any Medicare patients for two years).
Congress will likely come up with a temporary Doc Fix—yet again—because members of Congress do not want be on the receiving end of countless angry senior calls.
But the whole boondoggle is a testament to just how convoluted Medicare has become because Congress wanted to fix the spending problem. A wiser White House might have learned something from the ongoing Doc Fix saga when it crafted the 2,700-page ObamaCare. But we do not have a wiser White House.
November 13, 2012