The Medicare "doc fix" budget scramble

A permanent solution to the physician reimbursement boondoggle is not yet in sight

Published February 14, 2011 11:27PM (EST)

After further review, I think I should retract my assertion in my last budget post that Obama's new budget included a "smart proposal" for dealing with "the Medicare 'doc-fix' that keeps funneling cash to doctors without designating a funding source."

First, some background, outsourced to Jonathan Chait:

In 1997, Congress changed the formula for reimbursing doctors under Medicare. Due to poor design, they created a formula that would impose massive reimbursement cuts that were never intended by Congress. As a result Congress has regularly restored the unintended cuts. Yet because the law remains on the books, the budget assumes the cut will go into effect every year even though it won't.

The term "doc fix" refers to a permanent solution to this problem. In my review of various budget news reports this morning, I interpreted Tim Fernholz's National Journal report that "the budget proposes to pay for the annual "doc fix..." with $62 billion in health care savings" as just such a permanent fix. But that does not seem to be the case.

From Medscape:

President Barack Obama's proposed budget for fiscal year 2012 would delay a massive reduction in Medicare reimbursement for physicians from January 1, 2012, until January 1, 2014, and freeze rates in the meantime.

Released this morning, the budget for fiscal year 2012, which begins October 1, would finance this so-called "doc fix" to the Medicare reimbursement crisis by, among other things, reducing the Medicaid provider tax threshold, reducing Medicaid outlays for durable medical equipment, and speeding new, lower-cost generic drugs to the marketplace. These measures would raise $62.2 billion, which would offset the $54.4 billion cost of the 2-year doc fix and yield an additional $7.8 billion in savings.

A two-year fix is obviously not a permanent fix, nor is making sure doctors get their full reimbursements by squeezing blood out of Medicaid outlays seem all that sustainable, (or necessarily equitable.) I regret my hasty analysis.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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