This Valentine’s Day could be the beginning of the end of the federal government’s love affair with its outdated Medicare reimbursement formula.
The feds were supposed to have broken off this relationship starting in 2002. Instead, they’re enamored with dragging out payments to the point that doctors would have had a Medicare pay cut of more than 26 percent if Washington hadn’t – again – swooped in for therescuewith the”fiscal cliff” fix.
First, the formula.
It’s called the SGR, or “sustainable growth rate.” It’s not a new idea, but Congress decided to use it to determine just how to CUT pay each year to Medicare doctors to control spending. But the formula is misapplied.
“The formula is called the sustainable growth rate because it links Medicare physician pay increases to the performance of the general economy, not to the market-based conditions of supply and demand that would determine the price of medical services,” says the Heritage Foundation: “So if Medicare physicians’ pay in any given year rises faster than economic growth, then their pay is automatically reduced the following year.”
Secondly, the conservative think tank notes that, in every year since 2003, “instead of abolishing the formula, Congress sets off an annual panic among Medicare physicians. It’s a classic example of the fundamental foolishness of imposing administrative prices, plus price controls, that are divorced from economic reality.”
But hearts could get broken this Valentine’s Day.
The House Energy and Commerce Subcommittee on Health has a hearing scheduled to talk about Heritage’s idea to repeal and replace the SGR. Michigan Rep. and Committee Chair Fred Upton, R-St. Joseph, said in aspeech to doctors that he’d like to get such a law to the House floor by summer. He said he has “released a legislative blueprint that calls for freezing doctor payment rates for 10 years and basing future increases on their willingness to embrace methods to improve the quality and efficiency of care.”
While lawmakers take a stab at reform, physicians may already be moving on with their fiscal lives.
Forbes recently noted that as many as one in ten private practice doctors are ditching Medicare to engage in direct primary care, or “concierge” medicine. This allows doctors to work out primary care contracts directly with their patients.
Another doctor strategy is restricting their current Medicare patients. A 2010 American Medical Association Survey found nearly one in five physicians “are currently restricting the number of Medicare patients in their practice.” Some 17 percent are not taking new Medicare patients at all. The National Review reports that 45 percent of doctors said they “would consider leaving their practice or taking an early retirement” if Obamacare stands.
This Valentine’s Day, there’s not much love for federally-run health care.