The Congressional Budget Office just handed the doctors and lawmakers eager to fix a longstanding Medicare-physician pay problem a big gift.
In its budget outlook released on Tuesday, the CBO slashed the projected cost of a long-term “doc fix” by nearly half. That change means that if Congress wants to reverse the flawed and universally disliked 1997 Medicare payment formula known as the “sustainable growth rate,” it won’t have to come up with nearly as much money as previously expected.
The sustainable growth rate, or SGR, has been a perennial problem because it would pay doctors much less than they currently get for treating Medicare patients. Every year, Congress reverses the formula to keep payments from dropping, but only for a short period of time. In January, the latest one-year fix passed as part of the fiscal-cliff package.
This week, two proposals for reversing the SGR forever began circulating on Capitol Hill. On Wednesday, Reps. Allyson Schwartz, D-Pa., and Joe Heck, R-Nev., introduced a bill that would replace the formula with a temporary system of physician pay raises, to be followed by new payment methods that would reward more-efficient care.
A white paper penned by Republican staffers for the House Ways and Means Committee has also been making the rounds. The two proposals are not the same, but they share a basic framework.
Then the CBO came along. Its latest baseline significantly downgraded its predictions of Medicare spending in the coming years. That means doctors would see their pay reduced by less than anticipated if the growth-rate formula kicks in. On the flip side, that means freezing their pay would cost less. On Monday, the 10-year cost of eliminating the formula would have been $245 billion. On Tuesday, that number plummeted to $138 billion.
Schwartz and Heck have been at it for a while. Their current bill is basically the same as one they introduced last year. But during a roundtable discussion on Wednesday, they said the new numbers give them renewed optimism.
“Certainly, I think the lower CBO score increases the chances of passage,” Heck said.
They are not alone in their cheery perspective. The combination of a reduced price tag, a discusson of the issue early in the year, and apparent Republican interest in a policy change has brightened the outlook of the doc-fix-watching community.
“I don’t think I’ve ever been positive about getting to a permanent fix, but I am really a lot more optimistic now than I was previously,” said Julius Hobson, a senior policy adviser at Polsinelli Shughart and the former top lobbyist at the American Medical Association. “I think the combination is really a positive sign.”
This article appears in the February 7, 2013 edition of NJ Daily.