When fixing doc doesn’t fix anything
by David A. Saltzman
April 29, 2015
A When I was growing up, my buddy had a German shepherd he named “Doc.” I have to confess that whenever I hear “Doc Fix” I think of what a veterinarian once did to poor old Doc. Every year since the sustainable growth rate (SGR) was enacted as part of the Balanced Budget Act of 1997, there has been discussion of the “Doc Fix” — the physician payment schedule adjustments meant to achieve SGR.
After President Obama signed the Boehner-Pelosi $200 billion Medicare Reform package, the chief Medicare actuary issued a report that indicated my recollection of “Doc Fix” is closer to the truth than what Congress and the White House would have you believe. Reading analysis of the new law, it is clear that there is more smoke and mirrors in the law than if a carnival funhouse had burned to the ground.
For the last 17 years Congress has postponed (a nice way of saying “delayed the inevitable”) these reductions that, if now taken in aggregate, would reduce payments to physicians by 21 percent. Had that action been taken, doctors warned that they would stop seeing Medicare beneficiaries altogether. Doctors and their Medicare patients besieged Congress to find another solution. This is a long-term problem and requires a long-term solution. Yet no analysis I could find in researching this column supports this legislation as such a solution.
What the law does is shift some of the costs to the very beneficiaries who were pressuring for that alternate solution. There will now be a limited version of the means testing some analysts and legislators have been seeking. Starting in 2018, higher income beneficiaries will pay higher premiums for doctor visits and medicines. A year later, Medigap plans will no longer cover the deductible for doctor visits. While the President hailed the bill as “A significant bipartisan achievement,” it seems more like just another new can being kicked down an old hallway.
John R. Graham, from the National Center for Policy Analysis, says, “There are two major differences between this so-called ‘fix’ and previous ones. The first one is real: Previous increases have been offset by cuts to other government spending, and this one is not. The second one is fiction: that this Doc Fix is a permanent solution to the fee problem.”
The scoring of the bill by the chief actuary of Medicare is also quite different from that of the Congressional Budget Office. Over the entire 11-year period encompassed in the law, the chief actuary concludes that the increase in payments will be $205 billion, which is $29 billion more than CBO’s estimate.
Physicians also take it on the chin. Analysts conclude that in “no scenario” do physicians maintain a real, inflation-adjusted level of Medicare fees. Also adding to physician’s long-term woes under the new scheme, they take more risk because their fee adjustments are not linked to inflation. Their losses happen more gradually, but they are still being squeezed.
All of this begs the question of what happens when Medicare-treating physicians, already stretched thin by the onslaught of baby boomers, become unable to keep up with demand? Couple too few physicians with too little reimbursement and you have a recipe for a “Clintonesque” command and control — if not outright nationalization — of the medical community.
Politicians have once again done what politicians do — they deferred the problem. A better approach, Graham suggests, might have been to look at a shorter “Doc Fix” by finding enough budget offsets to make the action budget neutral. He also suggests equalizing payments for similar services made in different settings, reforming deductibles, coinsurance and copays, and other common sense objectives. Instead, we are just throwing more money at the problem, hoping it will go away. As my friend Art always cautions, “Bad ideas in the private sector go away. Bad ideas in the public sector get more funding.” The new law sounds a lot like what the vet did to my friend’s dog.