Congress has voted 17 times in the past 11 years to approve a “doc fix,” a stop-gap measure that delays cuts in Medicare reimbursements to physicians and serves as a temporary solution to the years-long struggle to re-jigger the formula used to determine Medicare funding levels.
The most recent vote came Monday night, when the Senate adopted a yearlong patch that the House had already passed last week. But, unlike many of the other times when Congress has stalled the cuts, considerable political capital was spent this time around in hopes of crafting a bipartisan solution that would finally overhaul the model used to determine Medicare funding that leaves it constantly short.
While speculation swirled about whether this was the time that the model would finally be tossed, House Republican leadership ultimately struck a deal to pass a temporary fix. And although the deal angered many of the Democrats who had pushed for an overhaul of the model, known as the Sustainable Growth Rate, Democratic leaders defended the bill that passed as a necessary evil. They said they had hope that this would be a year that a bipartisan, permanent fix could be passed.
"This was no hastily-made deal in the middle of the night. This was an agreement that came to fruition after more than a year of tough negotiations," Senate Majority Leader Harry M. Reid (D-Nevada) said of the bipartisan bill to overhaul the SGR, which never saw a vote, in a floor speech on Monday. "Unfortunately, the parties could not settle the issue of how to pay for the permanent fix. I would have preferred a real solution to the sustainable growth rate issue."
He later added: "Regrettably, we just don’t have the votes right now to fix this problem for good."
Here's everything you need to know about this year's doc fix, and why it may be a huge step toward a final solution to one of the longest-standing Medicare flaws.
So what is the "doc fix," and why is it needed?
The so-called "doc fix" passed yesterday is the latest incarnation of a bill passed frequently by Congress -- sometimes multiple times per year -- that avoids a sharp drop-off in Medicare payments.
In 1997, Congress created the Sustainable Growth Rate, a system that pegged the amount of money budgeted for Medicare payments to projected growth of the economy. However, within a few years, health-care costs far outpaced economic growth -- creating a multibillion dollar shortfall in funding for Medicare payments.
Since 2003, Congress has approved "doc fix" bills that appropriate more money to Medicare funding in order to avoid cuts in Medicare reimbursements for doctors. The last doc fix bill expired on March 31, forcing Congress to either pass another doc fix, pass a bill overhauling Medicare payments, or see skyrocketing costs of doctors who treat Medicare patients.
So why hasn't this been fixed before?
As Sarah Kliff explained in the definitive FAQ post on the "doc fix" back in 2011 for Wonkblog:
Professional societies, most notably the American Medical Association, have long lobbied to overhaul the funding formula and replace it with one that could more accurately predict what the program costs. The Obama administration endorsed permanent repeal of the SGR formula and the Government Accountability Office has run through what possible replacements could look like.
The obstacle is money. The current funding formula assumes Medicare will cost significantly less than it does (hence the constant shortfalls). To bring it into balance would cost about $300 billion more, according to Congressional Budget Office estimates. In a sense, that’s money we’re already spending, as we keep filling the funding shortfalls. But finding $300 billion all at once is a tough lift, and neither side wants to simply add it to the deficit. And with each year that goes by, the number keeps getting bigger, as the gap between what the SGR formula appropriates and what Medicare actually costs gets bigger and bigger.
Three years later, that explanation stands, for the most part. (The CBO now estimates that replacing the SGR could be done for around $180 billion, however the bipartisan Committee for a Responsible Federal Budget says it would actually cost $215 billion). No matter the final price tag, money remains the major obstacle scrapping the SGR -- even as all sides -- from the Washington Post and Wall Street Journal editorial boards, to the conservative Heritage Foundation, to House Democrats, to medical professional associations -- agree that the SGR needs to be scraped and replaced. The looming question is, how do you pay for it?
So why is this time different?
Like clockwork, each time the "doc fix" comes up for a vote, lawmakers and medical associations make a ton of noise about the need for a permanent fix. Then, without many viable options for a true permanent fix, Congress passes another stop-gap measure.
But this year, in an effort led by Senate Finance Committee Chairman Ron Wyden (D-Oregon), lawmakers made real headway on a bipartisan bill that would scrap the SGR and instead shift to a quality of service-based model of reimbursing doctors for taking Medicare patients.
"This is really the first time there has been any real progress in terms of getting things done," said one Democratic aide, of this year's efforts to pass a permanent fix to the SGR funding method. "This is as furthest that they’ve ever come to actually getting rid of the formula."
What we saw this year was a robust discussion of why the SGR system must go, and a sussing-out of which reforms to the system are most amenable to lawmakers on both sides of the aisle.
What was missing, however, was an agreement on paying for the permanent fix.
So, will next year be the year?
The biggest challenge to overhauling the SGR will remain figuring out how to pay for it. Democrats have repeatedly floated the idea of using funds from Overseas Contingency Operations (read: military money) to offset the cost of ditching the system but that option has been panned by Republicans. Some on the right have proposed cuts to other parts of the healthcare budget to offset the cost of repealing the SGR, but that would be risky in an election year.
Others have argued that getting rid of the SGR -- which the Congressional Budget Office now estimates could be done for about $180 billion -- doesn't even need to be offset, another non-starter with some on the right.
But, even with no clear plan to pay for the SGR scrap, several proponents of a permanent fix to the Medicare funding system insist that this year's efforts were not in vain.
Because the desire to overhaul the Medicare funding system is bipartisan in nature, they argue that this year's efforts lay groundwork that will remain relevant no matter which party controls the House and/or Senate next year.
They also note that this year's chief champion of the permanent fix, Sen. Wyden, will likely be in an even stronger position to push for a long-term fix. This year, aides note, Wyden took over the chairmanship of the Senate Finance Committee just a few weeks before the doc fix came up for a vote. With a full year between the next time the Medicare reimbursement cuts come up for a vote, they argue that 2015 may be the year he can get it done.