Medicare physician fees to be cut by 27%. . . or not. Is this the first unworkable law Congress ever passed?

Secretary of Health and Human Services, Kathle...
27% you say? Tempting, but no.

Unless Congress intervenes, Medicare physician pay rates will be cut by 27.4% beginning January 1, 2012. This is a result of the 1997 law related to the sustainable growth rate for physician fees.  Congress has to date never allowed the cuts called for in the law to actually take place.  The law may be flawed, but it is interesting that when it comes to cutting costs via laws it passed, Congress picks its winner and losers. 

At the same time some politicians on the right have no problem proposing changes in Medicare that will fix government payments and transfer excess increases to Medicare participants.  These cuts in physician payments that never happen were originally part of the health care reform law and were counted as savings but were separated from the law before its enactment. They are still counted as savings to Medicare for budget purposes even though the Trustees note they are unlikely to occur.

Here is what the 2011 Trustees Report says.  Talk about between a rock and hard place, do you think Congress knows what it is doing?

Total Medicare expenditures were $523 billion in 2010 and are projected under current law to increase in future years at a somewhat faster pace than either workers’ earnings or the economy overall. As a percentage of GDP, expenditures are estimated to increase from 3.6 percent in 2010 to 6.2 percent by 2085 (based on our intermediate set of assumptions). If Congress continues to override the statutory decreases in physician fees, and if the reduced price increases for other health services under Medicare become unworkable and do not take effect in the long range, then Medicare spending would instead represent roughly 10.7 percent of GDP in 2085. Growth of this magnitude, if realized, would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries, and the Federal Budget.

Here is what HHS recently said about the situation:

A Statement from U.S Department of Health and Human Services Secretary Kathleen Sebelius

On the need to fix the Sustainable Growth Rate issue upon release of the final Medicare physician fee schedule rule

America’s physicians are the backbone of our health care system.  Physicians are there for us throughout our lives, helping us improve our health and fight off disease.  Unfortunately, while Medicare remains strong, physicians are facing steep payment cuts as a result of a flawed 1997 law. Almost every year for more than a decade, doctors have faced this annual threat and the Congress has in turn acted to temporarily prevent these deep reductions from taking effect. We have not and will not let deep cuts to doctors’ payments occur.  The Obama Administration is 100 percent committed to fixing the flawed Medicare payment system and protecting Medicare beneficiaries’ access to doctors.

Earlier this year, President Obama presented a deficit reduction plan in which he once again called for a permanent fix to the sustainable growth rate (SGR) provision so that our nation’s physicians would no longer have to face the threat of draconian cuts year after year.  Today we again call on the Congress to quickly and permanently pass the so-called ‘doc fix’ and we pledge to work with legislators on both sides of the aisle to address this issue once and for all.  The pattern of threatened SGR cuts and last-minute Congressional rescues is in itself not a sustainable solution and must be remedied. Patients and physicians will both benefit when we take the action recommended by the President and permanently address this issue.

Setting physician fees under Medicare is an immensely complicated, even bizarre process.  If you have nothing to do for a week or two why not meander through the proposed regulations released by HHS or just glance at them to get a sense of what a massive bureaucracy can create.  A warning though, they comprise 1235 pages, but not to worry, you will be asleep within the first three.

Regulations for physician payment policies and fee schedules


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