This Is the End for Washington’s Most Frenzied Lobbying Extravaganza

A permanent Medicare “doc fix” will be the nail in the coffin for a well-worn K Street tradition.

This January 3, 2011, photo shows a 'K' Street sign in northwest Washington, D.C. Addresses on 'K' Street are known as a center for numerous think tanks, lobbyists, and advocacy groups.
National Journal
April 6, 2015, 4 p.m.

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.

(RE­LATED: Get Ex­cited, Every­one, It’s “Doc Fix” Time)

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.

(RE­LATED: Sen­ate Demo­crats Thaw on “Doc-Fix” Deal After Abor­tion Tweak)

“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.

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