House Approves Doc Payment Fix

Last night via a 243 to 183 vote, the House approved a bill that would stave off the projected 21% cut in physician (fees) reimbursement under Medicare, set for January 1, 2010.  The “Doc Fix” has been a hot-button issue within the health care reform debates as both the House and the Senate have not been able to incorporate the costs within their reform bills without busting the President’s deficit spending targets.  President Obama has stated that he will not sign a reform bill that is anything less than budget/deficit neutral. 

The House bill would cost the Federal government approximately $300 billion with no projected revenue offset.  This $300 billion is presumed to be all debt or certainly, the majority share will be debt.  The Bill does somewhat create a more permanent fix to the flawed formula presently in place.  The original formula, in place since 1997, ties physician reimbursements under Medicare to a GDP index, designed to theoretically reduce the overall growth in Medicare spending (the Sustainable Growth Rate formula).  Since 1997 however, Congress has seen wide swings in physician reimbursement levels and in periods or times when the rates would be reduced via the formula, the physician community has lobbied heavily for a “new money” infusion to avoid fee cuts.  What has occurred since the formula’s installation in 1097 has been far from a stabilization of physician fees and a near yo-yo battle every year between the Medical Community and Congress.  The “fix” in the House bill ties physician fees to GDP growth but provides a plus 1% add-on for all non-primary care physicians and a 2% add-on for primary care physicians.   

The Bill faces unlikely embrace in the Senate where earlier in the year (October), the Senate rejected a similar measure designed to stave-off physician fee cuts.  The Senate appears to approve of a pay-as-you-go approach or methodology rather than a wholesale restructuring of the current formula, despite strong sentiment among all Senators and Representatives that the present formula isn’t working.  In reality, the final issue will come down to money and how much the Senate is willing to allocate beyond a one-year fix.  With the House version of reform and the soon to be released Senate version of reform foreshadowing $1 trillion plus spending programs on health care, there may be little political muster left to add an additional long-term debt of $200 plus billion for a more permanent “doc fix”.

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