Bipartisan fix advancing for Medicare doctors’ pay

  • Senate Finance Committee Chairman Sen. Max Baucus, D-Mont. speaks on Capitol Hill in Washington. AP photo

    Senate Finance Committee Chairman Sen. Max Baucus, D-Mont. speaks on Capitol Hill in Washington. AP photo

  • House Ways and Means Committee Chairman, Rep. Dave Camp, R-Mich. listens during a hearing of the committee on Capitol Hill in Washington. AP photo

    House Ways and Means Committee Chairman, Rep. Dave Camp, R-Mich. listens during a hearing of the committee on Capitol Hill in Washington. AP photo

  • Senate Finance Committee Chairman Sen. Max Baucus, D-Mont. speaks on Capitol Hill in Washington. AP photo
  • House Ways and Means Committee Chairman, Rep. Dave Camp, R-Mich. listens during a hearing of the committee on Capitol Hill in Washington. AP photo

WASHINGTON — It’s that time of year again: doctors caring for Medicare patients once more face a steep pay cut. But this time Congress is pursuing a permanent fix to the annual drama that has undermined the medical profession’s confidence in the nation’s premier health program.

A fundamental change in the budget equation has handed lawmakers a rare opportunity to repeal Medicare’s broken physician payment policy, while also freeing them from having to waive billions of dollars in impending cuts every year. Slowing health care inflation has slashed the cost of repealing the old formula, bringing it down to $116.5 billion over 10 years, according to the latest estimates.

Demo-crats and Repub-licans on both sides of the Capitol plan to push ahead this week with a framework for a new payment policy. The new approach would set up financial carrots and sticks for doctors to provide quality, cost-effective care to more than 50 million elderly and disabled Medicare recipients. Up to 10 percent of an individual physician’s pay could eventually be linked to the doctor’s performance on quality indicators.

The plan would repeal the centerpiece of the old payment formula, a 1990s budget provision that mandates automatic cuts to doctors to limit Medicare spending. It became a symbol of government dysfunction after Congress got into the habit of regularly issuing temporary reprieves. Otherwise doctors might stop accepting Medicare patients.

But restoring payments to doctors each year didn’t solve the problem, because the law remained on the books. A reduction of nearly 24 percent next year is called for unless Congress acts.

Experts say the old payment formula also encourages a costly, piecemeal approach to health care. Doctors bill for as many services as they can to maximize Medicare reimbursement, but there’s no consistent focus on keeping patients as healthy as possible.

Payments to doctors account for 10 percent of Medicare spending, about $60 billion a year. Other outpatient providers are also paid under the same system.

Not many years ago, the 10-year cost of repealing the old formula was headed into the $300-billion range. Now that number has declined to a point where a comprehensive fix looks cheaper than continuing to pony up billions for short-term waivers.

“These annual patches are adding up to a lot more than if we do it in one fell swoop,” said David Certner, legislative policy director for AARP. “That obviously gives more momentum to make these changes.”

On Thursday the Senate Finance Committee is expected to vote on a broad bipartisan framework to begin revamping doctors’ pay.

“Enough with the quick fixes,” says chairman Max Baucus, D-Mont.

The House Ways and Means Committee is on a parallel course.

“Physicians and seniors alike, for over a decade, have been hamstrung by short-term patches instead of the certainty of a permanent solution,” said chairman Dave Camp, R-Mich.

But the deal is far from done.

Since Congress doesn’t have enough time to resolve something this complicated before the holidays, lawmakers will need to approve a temporary patch to get them through the first few months of 2014. Then comes the hard part. Doctors want a raise, not just a freeze of current rates. That would cost money. But the biggest cost barrier has to do with the broken payment formula itself.

In one of those bewildering twists of federal budgeting, projected “savings” from the formula’s often-waived cuts are counted as if they were real, and have to be offset with actual spending reductions or tax increases.

Finding mutually acceptable offsets is a huge challenge for Camp and Baucus.

“Fixing the fee schedule comes at a cost and the question is how Congress will cover these costs,” said Tricia Neuman, an expert on Medicare with the nonpartisan Kaiser Family Foundation.

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