Once Again, Congress Confronts the ‘Doc Fix’ Dilemma

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Brady: Tackling the corporate tax puzzle.
National Journal
Catherine Hollander
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Catherine Hollander
Oct. 23, 2013, 2 p.m.

Every year, law­makers go through a ritu­al about as pleas­ant as a dent­al checkup.

For the past dec­ade, Con­gress has passed a series of patches to pre­vent doc­tors who treat Medi­care pa­tients from see­ing their re­im­burse­ments drastic­ally cut. Each time, law­makers grumble and talk about get­ting something per­man­ent in place so they can end this de­tested ex­er­cise. And every year, they wait un­til the last minute and hast­ily patch it, only to re­peat the routine.

This year was sup­posed to be dif­fer­ent: The cost of a per­man­ent fix was cheap­er than ever, law­makers got an early start on the le­gis­la­tion, and the two House com­mit­tees of jur­is­dic­tion — Ways and Means and En­ergy and Com­merce — were work­ing to­geth­er, bon­ded by their friendly Michigan chair­men.

Now, mem­bers are see­ing their win­dow of op­por­tun­ity slam­ming shut be­fore their eyes, thanks to the fisc­al fight­ing that closed down the gov­ern­ment and threatened to bring the coun­try in­to de­fault. “I am wor­ried that the clock will run out,” says Rep. Kev­in Brady, R”‘Texas, who chairs the Ways and Means Health Sub­com­mit­tee.

Hope isn’t lost yet. “If” after “if” will de­cide the fate of this year’s “doc fix.” If the Ways and Means Com­mit­tee gets its le­gis­la­tion out the door in time to pass it by the end of the year. If ar­gu­ments over how to pay for it don’t threaten the rare bi­par­tis­an co­oper­a­tion on policy. If Cap­it­ol Hill’s fisc­al fights are over, or res­ult in a lar­ger pack­age of re­forms in which a per­man­ent fix could find a home.

Brady and oth­er Re­pub­lic­ans see get­ting the doc fix done as the key to em­bark­ing on the rest of the Medi­care re­forms they say are a pri­or­ity. They point to the latest re­port from Medi­care’s trust­ees, which says the pro­gram’s hos­pit­al in­sur­ance trust fund will be­come in­solv­ent in 2026 un­less changes are made.

“I’m con­vinced we can’t achieve sav­ing and ex­tend­ing the life of Medi­care un­less we first get the re­forms of how we re­im­burse doc­tors right,” Brady said.

For Medi­care re­form, Brady is con­sid­er­ing means-test­ing be­ne­fits; re­design­ing Parts A and B, the hos­pit­al- and med­ic­al-in­sur­ance por­tions of the pro­gram; ex­plor­ing “site-neut­ral” pay­ments for ser­vices, which would ap­ply the same pay­ment rates to vis­its in hos­pit­al out­pa­tient set­tings and phys­i­cian of­fices; and re­form­ing post-acute-care pay­ments.

The prob­lem with the doc fixes began with the sus­tain­able-growth-rate for­mula, which Con­gress passed as part of the Bal­anced Budget Act of 1997 in an ef­fort to hold down Medi­care costs. If Medi­care ex­penses ex­ceed the SGR in a giv­en year, as they have since 2002, the law calls for cuts in phys­i­cian pay­ments the fol­low­ing year. Its flaws have been ap­par­ent for nearly as long. Over time, the deep cuts ac­cu­mu­late, mak­ing the cost of a fix high­er the longer Con­gress waits.

This year, a ray of hope emerged in the form of a sur­prise Con­gres­sion­al Budget Of­fice score. In Feb­ru­ary, the non­par­tis­an CBO an­nounced that it was slash­ing the price of a 10-year fix to $138 bil­lion, nearly half of pre­vi­ous es­tim­ates, partly be­cause of a slow­down in the na­tion’s Medi­care spend­ing.

The re­duced price tag was the start­ing gun in a year in which more pro­gress to­ward a per­man­ent fix was made than ever be­fore. The Ways and Means and En­ergy and Com­merce com­mit­tees re­leased a joint frame­work for change in Feb­ru­ary. En­ergy and Com­merce even passed le­gis­la­tion un­an­im­ously in Ju­ly, a feat that was much easi­er than a fi­nal solu­tion will be, giv­en that the com­mit­tee didn’t touch pay-fors.

Ways and Means is ex­pec­ted to build on the En­ergy and Com­merce frame­work, which sets a short-term peri­od of sta­bil­ity for doc­tor pay­ments while re­forms to hold them down in the long run are tested. The Ways and Means Com­mit­tee can also ex­am­ine the CBO score of the En­ergy and Com­merce le­gis­la­tion — $175 bil­lion — for clues as to how to bring down the cost of any pro­pos­als. Still, even a cheap bill re­quires money from some­where.

“I’m not sure that any­body at this point is very san­guine about us find­ing a way to pay for it,” said Rep. Jim Mc­Der­mott, D-Wash., the rank­ing mem­ber on the Health Sub­com­mit­tee. “And there’s been no ser­i­ous dis­cus­sion in the com­mit­tee about who we’re go­ing to go after, if we’re go­ing to do this.”

Lob­by­ists who work closely on this is­sue offered a range of fore­casts for how this is most likely to play out in com­ing months (Con­gress has un­til the end of the year be­fore an­oth­er tem­por­ary fix is needed); there was little agree­ment among more than a half-dozen of them in­ter­viewed by Na­tion­al Journ­al Daily. They did agree that Ways and Means was likely to put its own stamp on the En­ergy and Com­merce policy even as it hews to the same broad frame­work, that it would try to get the cost down, and that the pay-fors, as usu­al, would threaten to de­rail the pro­cess in the end.

An­oth­er patch might not be fatal to this year’s pro­gress, though. The same law­makers will be in Con­gress next year. Work done in 2013 can be dus­ted off again in 2014. The ball might even be fur­ther down the field.

Still, every­one’s sick and tired of the routine. “Nobody really gains any­thing in this crazy charade we go through every year,” Mc­Der­mott said. And it’s easy to see why his col­leagues would be im­pa­tient, too: If the doc fix is the key to Medi­care re­form, as Brady ar­gues, it’s also the pesky obstacle pre­vent­ing the real meaty dis­cus­sion of how to save Medi­care. That may have to wait even longer.

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