Fix The Flawed Medicare Doc Fix

Policy Reports | Health

No. 364
Monday, April 13, 2015
by John R. Graham

For over a decade, Congress has struggled with an inadequate formula to calculate Medicare payments to physicians.  The formula results in an amount too low to ensure physicians will continue to see Medicare beneficiaries.  At least once a year, Congress has to pass a short-term increase to Medicare physician payments to prevent fees dropping about 20 percent.  The current boost expired on March 31, 2015, necessitating a rapid response.

MACRA is a poor doc fix for two major reasons:

  • Less than four percent of its spending is offset by cuts to other government spending, resulting in an estimated $141 billion increase in cumulative budget deficits over 10 years, and $500 billion over 20 years.  This is the first time since Congress began to struggle with the physician payment formula that it has abandoned budget neutrality, a commitment made previously by both parties.
  • MACRA significantly increases federal control of the practice of medicine, in line with the ambitions of Obamacare.  Doctors will face increasing requirements to comply with federal regulation in order to get paid.  These will likely include greater reliance on government-certified Electronic Health Records, which have already proven to frustrate doctors and do nothing to benefit patient care, despite an investment of $30 billion taxpayer dollars.

Three options are available to reduce the shortcomings of MACRA and keep the door open to effective Medicare reform:

  • A two-year doc fix, paralleling the extension of the Children’s Health Insurance Plan in MACRA.
  • Including MACRA in the pay-as-you-go (PAYGO) scorecards, requiring the president to pay for it with other funds.
  • Finding offsets to pay for the $141 billion in MACRA spending that is not yet offset.

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