Link The Doc Fix To A Larger Payment Reform Package

Our guest blogger is Lindsay Rosenthal, a Special Assistant for Domestic Policy at the Center for American Progress.

With lawmakers determined to curb spending, legislation to prevent Medicare providers from taking a 27 percent cut in 2012 has been swept up in congressional battles over the payroll tax, bringing a new urgency to the debate surrounding how best to reform the Sustainable Growth Rate formula (SGR). Since 2002, when the cost of health care skyrocketed beyond the nation’s economic growth rate, Congress has sheltered doctors from the excessive payment cuts required by the SGR, continuously voting to prevent full cuts to Medicare reimbursement payments and kicking the can down the road through so-called “doc fixes.”

Sarah Kliff of the Washington Post raises the question of whether we should “fix doc fix” at all. As she argues, we already pay doctors, particularly specialists, much more than other countries pay their physicians, without achieving better health outcomes. But surveys conducted by the American Medical Association (AMA) also show that cutting doctors’ payments could cause some to flee the system and exacerbate the Medicare doctor shortage (which is quite pronounced in some geographic areas).

Ultimately, fixing the doc fix is a problem we need to tackle, if only to free ourselves from the perennial headache that the legislation has caused. But the fix should be part of a larger package of reforms in which doctors accept changes in the way that health care is paid for and delivered. Effective payment and delivery system reforms would build on the measures already put in place by the Affordable Care Act and improve the quality of care for patients, while lowering the health care growth rate over the long term. For example, bundling payments would ensure that doctors are reimbursed for the quality of services they deliver, rather than the volume and quantity of (often unnecessary and unproven) tests and services they provide.

In a system where one-third of Medicare spending is excessive and unnecessary and over 56 percent of annual spending on health care goes to labor costs, examining how we pay providers for their services should be part of any conversation that takes place around reforming the SGR.