When the Senate reconvenes next week, it is expected to quickly pass the House’s bipartisan deal to permanently end the so-called Medicare “doc fix”—one of Capitol Hill’s least favorite rituals. But while it was a routine headache for lawmakers, it has also been a lobbying bonanza for K Street and the special interests it represents.
After all, must-pass legislation that commands the whole industry’s attention on a recurring basis doesn’t come along every day, especially in a Congress where legislating has slowed to a crawl.
“There are people who have made careers out of navigating the [doc-fix] patch,” one official who has worked for several trade groups said, with tongue only lightly planted in cheek. “This is going to put lobbyists out of business.”
A slight exaggeration, but perhaps just slight. Lobbyists often say that annual or semiannual “sustainable growth rate” fixes, which prevented 20 percent Medicare pay cuts to doctors 17 times since 2002, were among the craziest times in their work lives. Their clients fretted, worrying that they would be the ones to pay for the patch that could cost upwards of $20 billion and was always almost completely offset by spending cuts.
On the flip side, every patch was backloaded with so-called extenders, which kept other health care programs going that were sometimes only tangentially related to Medicare, often as a deal-sweetener to make sure it passed. So clients also expected their priorities to make the list.
“This became Item No. 1 through 10. It was all you did,” said Julius Hobson, a health care lobbyist who focused on the SGR for the Polsinelli firm.
Barring a Senate disaster, the final doc-fix lobbying dash is winding down. Hospitals and Medicare beneficiaries are shouldering the $70 billion in cuts that help partially offset the $210 billion cost to permanently nix the SGR. A couple dozen extenders have been tacked onto the bill. The House cleared it with jaw-dropping numbers.
What’s next? Well, as lobbyists certainly eager to burnish their services are wont to do, some very quickly pointed out that health care is one-seventh of the U.S. economy. Indeed, there is always going to be something else for Congress to address. Issues like Obamacare’s Cadillac tax seem likely to command lawmaker and lobbyist attention in the coming years.
“We are expecting to get extremely busy post-SGR,” said Krista Drobac, who represents an array of health care interests at Sirona Strategies, which she cofounded with Kristen Ratcliff. Still, Drobac added, “I think it’ll be pretty hard to rival the urgency of the SGR.”
One former Senate staffer described that doc-fix ritual as “ridiculous.” Ads would start to appear on the Metro and Beltway publications begging Congress not to let this huge cut to doctors go into effect. Committee staff in particular were inundated with meeting requests, phone calls, and emails—which led to what everybody involved invariably described as the “rumor mill” that plagued doc-fix negotiations.
“Information, any rumors or gossip, is a premium,” the ex-Senate aide said. “It’s not just what you as a staffer are saying either, but what your counterparts on the other side of the aisle are saying, too.”
The upside was that members and staff were usually almost exclusively focused on the doc fix whenever its time came up—but that in turn contributed to this information overload.
“There tends to be a lot of false information around SGR because things are moving so quickly,” Drobac said. “You really have to do due diligence to figure out: Is this true?”
The trade-group official said that industry associations would focus on making sure they had one member on their side who could object on the floor if any unexpected provisions suddenly appeared in the bill or an amendment came up. The stakes were high, too. Congress tackled the doc fix as part of the fiscal-cliff deal in 2013, and by one source’s telling, a 72 percent cut to diabetes test strips was inserted “in the dark of night” to help pay for it. (The Senate passed the final fiscal-cliff bill a little shy of 2 a.m.)
“Nobody saw it coming,” the source said. “They didn’t even know to lobby against it.”
That’s why the rumor mill was such a necessary nuisance during the SGR lobbying craze. Everybody lived in perpetual fear of being targeted to pay for the temporary patch; the most recent one in 2014 cost $20 billion to stave off the doctor payment cuts for one year.
“That’s what would drive you on every patch. It wasn’t so much about, ‘Will they do a patch?’ We figured they’d do a patch,” Hobson said. “But it was more about, ‘OK, when they do this, are they going to take money from my left hand to put in my right hand?’ You spent more time worried about that.”
So what’s going to fill this void? There isn’t an obvious candidate. Drobac pointed to the Obama administration’s rulemaking that will inevitably follow the final doc-fix deal’s overhaul of Medicare’s payment formula to doctors, moving toward a merit-based system. Congress could also vote on major entitlement reform later this year—and if the Supreme Court rules to invalidate Obamacare’s tax credits in 30-plus states this summer, health care will suddenly be back at the top of the Capitol’s agenda.
But those are one-time deals. What made the doc-fix so unique—or aggravating—is that it kept coming back up, year after year. For an analogous lobbying war in the future, one possibility could be Obamacare’s Cadillac tax, which is set to take effect in 2018 and is hated by labor unions.
Some Democrats and Republicans on Capitol Hill are already agitating against the tax, but the cost of repealing or delaying it would cost billions of dollars (full repeal comes with a $87 billion price tag). That means that somebody presumably will have to pay for it—which could set off a frenzy not entirely unlike the doc fix.