(Bloomberg) — As policy-making disgraces go, last week's House of Representatives vote for a temporary "doc fix" to avoid a cut in Medicare payments to doctors is hard to beat: It's financed in part through accounting gimmicks, and the vote was so rushed that most members of Congress didn't even realize it had been held.
A permanent fix is offered as an alternative, and it would indeed be better, but this option, too, could be much stronger.
Even middling structural reforms are apparently out of reach in this age of diminished expectations. And yet, as Medicare costs overall continue to decelerate, lawmakers should seize the opportunity to reform health-care financing so that payments are based on value rather than volume. Doctors and hospitals need some clarity about how and when this evolution will proceed; the House legislation, which will be voted upon by the Senate today, provides none.
The doc fix is a mechanism that Congress has used for about a decade to avoid following the "sustainable growth rate" formula that lawmakers came up with in the late 1990s to constrain annual increases in Medicare payments to doctors. This year, doctors are scheduled to face a 24 percent reduction in Medicare rates, and the House has voted to spend $16 billion to keep that from happening. (The legislation also includes an unnecessary delay in a shift to a new, and admittedly more complicated, billing code system. But that is a topic for another column.)
Most commentary in Washington about the doc fix misses the point. It is typically held up as proof that Congress cannot stick to its promises. Yet the core problem is that these temporary fixes fail to change the mechanism for paying to doctors, from one based on volume of services to one based on value of care.
The usual complaints about the doc fixes are not only misplaced but also mostly misleading, because the temporary patches have generally not been fiscally irresponsible, as a recent analysis from the Committee for a Responsible Federal Budget shows. For one thing, the patches have typically held payments about flat, rather than increasing them in line with all health-care costs. Over the past decade, the temporary fixes have resulted in a 0.7 percent average annual increase in the physician payment rate, which is much lower than health-care cost increases in general. Plus, more than 90 percent of time that Congress has passed doc fixes, it has found a way to pay for them. And some of the ways it has come up with the money have even been useful. For example, Congress has offset the doc fix in part by expanding bundled payments, which set a single payment for all the care associated with a particular illness or injury.
