NCPA - National Center for Policy Analysis


June 23, 2010

In order to prevent a one-fifth drop in the fees physicians receive under Medicare, Congress is proposing another in a series of temporary fixes.  The American Medical Association (AMA) engaged in an expensive lobbying campaign to implement the so-called "doc fix" for Medicare Part B, but Congress is unlikely to permanently solve the problem, says John R. Graham, Director of Health Care Studies at the Pacific Research Institute. 

Despite past short-term fee fixes, Medicare beneficiaries' access to care is still tenuous.  For example, last October the Mayo Clinic decided that it could no longer accept Medicare patients at its two primary care clinics in Phoenix. 


  • In 2009, Houston's largest medical practice -- the Kelsey-Seybold Clinic -- announced it would no longer accept new patients enrolled in the traditional Medicare Part B program because reimbursements had become too low.
  • Almost all of the clinic's patients have switched to Medicare Advantage plans, most of which negotiate their own payment rates with providers.
  • Unfortunately, many seniors who have access to Medicare Advantage plans will soon lose them under the health reform law, because of a roll-back in the premiums the government will pay the plans and despite the government's insistence to the contrary.
  • In fact, the Chief Actuary of the Centers for Medicare & Medicaid Services estimates that 7.4 million Medicare beneficiaries will lose their Medicare Advantage plans by 2017. 

The fundamental problem with Medicare's fees is not the level at which the government fixes them, but that the government fixes them at all.  The system cannot be repaired: It would be far better for the federal government to simply pull the plug on the entire mechanism and convert Medicare Part B to a system of vouchers.  In return for a hard budget cap, the government would allow physicians to charge whatever fees they and their patients agreed upon.  The government could liberalize the popular, private Medigap plans to allow seniors to cover extra physicians' fees, protecting them from the costs of outpatient care beyond the value of the vouchers, says Graham. 

Source: John R. Graham, "The Myth of the 'Doc Fix,'" National Center for Policy Analysis, Brief Analysis No. 710, June 22, 2010. 

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