WASHINGTON -- It’s been called “dumb,” “bad policy” and “common-sense-defying." And that’s by the people in charge of it. It’s also called the “doc fix,” and it’s finally letting out its death rattle.
At long last, Congress on Tuesday killed off a policy with no defenders that has served as an excuse for crisis-motivated legislating for years.
Over the past decade and change, the term “doc fix” became shorthand for a nearly annual process by which Congress, facing a big, unintended cut to how much Medicare pays physicians, would scramble to find some way to stop it, as doctors issued loud, mostly empty threats to stop treating Medicare patients. This happened 17 times between 2003 and 2014. Seventeen times.
Rather than actually addressing the policy requiring these cuts and coming up with a new way to pay doctors that actually worked as intended, Congress continually dug itself into a deeper hole, making a permanent doc fix costlier. It’s like putting off repairing that leaky faucet in the bathroom and instead putting a sponge under the drip so they don’t have to hear the splashing sound.
This embarrassing legislative ritual could be seen a precursor to the fiscal brinksmanship and dysfunctional governance that has become more the rule than the exception in Washington. But this year, somehow, Republican and Democratic lawmakers came together, led by House Speaker John Boehner (R-Ohio) and House Minority Leader Nancy Pelosi (D-Calif.), with the full-throated support of President Barack Obama, to overwhelmingly pass a $141 billion bill that fixes the doc fix, and it's is headed to the White House.
Amazing as it is that Congress passed bipartisan legislation that makes substantive policy in the current political climate, what’s even more amazing is it took a dozen years to get it done, despite virtually universal hatred of the old doctor-payment policy.
During those years, Congress dithered and lobbyists lobbied until these cuts in physicians’ fees were mere days or even hours away -- and in a few cases, actually took effect, at least briefly -- until the emergency scared lawmakers enough to do something. That usually amounted to a pay freeze or a small raise for physicians, along with cuts for other medical providers. The fix would be temporary, guaranteeing that Congress would have to revisit the issue within a few months or maybe a year or two, creating the same spectacle all over again.
“That is a lot of bad policy all around. The fact that there’s not a Medicare freight train every year is probably better for humanity,” said Tom Scully, who was administrator of the Centers for Medicare and Medicaid Services in 2002, the first time a doctor pay cut kicked in.
Pretty much the only winners in the doc fix economy were the lobbyists paid to influence it and the health care reporters paid to cover it, two camps that profited from this mess and don’t deserve your sympathy.
Lately, there’s been some strange, advance nostalgia for the doc fix. Defenders say it’s been good for the federal budget because it’s kept physician payments lower than they would’ve been under the system the preceded it, and because Congress usually made other spending reductions to pay for blocking the cuts required by the "sustainable growth rate," or SGR, a complex formula to calculate annual pay adjustments for doctors treating Medicare beneficiaries.
But garbage policy that reduces the budget deficit is still garbage policy. If Congress wanted to reduce the deficit, Congress could have passed deficit-reduction bills.
Chip Kahn, CEO of the Federation of American Hospitals, put it more tactfully. “It’s wrongheaded policy-making. If you’re going to cut people and let it go to deficit reduction, then let’s do that. If you’re going to cut people so that something else doesn’t happen, I can’t believe that’s good policy,” he said.
This year, Boehner and Pelosi decided to rip off the Band-Aid, and the Senate went along with it despite some squawking by deficit scolds. The House leaders pieced together a package that’s not really paid for and adds to the deficit, and told their respective caucuses to take it or leave it. And it worked! Some Senate Democrats complained a bit because they didn’t get to put their fingerprints on it, and some Senate Republicans protested about the legislation's effect on the budget. But once Obama enthusiastically endorsed the Boehner-Pelosi deal, they began to quiet down. The House passed the measure 392-37 last month, and the Senate approved it 92-8 Tuesday evening.
The legislation on its way to Obama's desk would give doctors a small fee increase over the next few years, then link how much they get paid to how well they treat their patients.
All this was necessary because of a policy enacted in 1997 that pretty much everybody knew was bad only a few years in. Back in the ‘90s, Congress wanted to curb rising Medicare spending on physician services, and concocted the "sustainable growth rate" policy. Turns out, only the third word in the name was true.
“The doctor policy here was never intended to reduce doctor payment as much as it did,” said Kahn, who helped create the maligned physician-payment system as a House Republican aide back in the 1990s.
This problem first reared its head in 2002, when the SGR cut Medicare payments to doctors by 4.8 percent. Nobody wanted this, but Congress let it happen anyway. That was the last time they did.
“The docs really got angry,” said Scully, now a health care lobbyist and investor. The docs stayed that way.
Virtually everyone agreed that the SGR policy didn’t work, and had to be replaced with some other method of restraining physician payments. But the usual intra- and inter-party squabbling, a ton of lobbying and a rising price tag made a permanent replacement harder and harder to achieve.
“There’s no fun way around it,” Scully said. “There have been a lot of efforts to try to fix it, but they were always painful.”
During the intervening years, the formula kept calling for lower payments and Congress kept stepping in to stop them, usually by taking money from hospitals and other health care providers to pay for it.
“There was a constant sense of crisis,” Kahn said. “From a provider’s standpoint, it was an annual or semi-annual nightmare because it meant that you were spending all your time not worrying about big-picture policy, but worrying about how your rates might be cut in some way so that Congress could get through the next six months or year,” Kahn said.
To make these interventions seem cheaper, Congress started pretending that one year’s cuts would simply be delayed and added to the next year’s cuts. Then they’d block that one, too, and so on. That’s why the reduction that was slated to take effect this spring was more than 20 percent.
So does the end of the doc fix mean the end of legislative brinksmanship and the beginning of a new era of bipartisan cooperation in which lawmakers will actually manage the federal government like they’re supposed to? Hardly. The same week the House passed the Medicare bill, Republican senators were trying to repeal Obamacare again.
But does doing away with the farcical doc fix process at least mean Congress has solved the problem of how Medicare should pay physicians? Once again, hardly. The “sustainable growth rate” system was considered reform in 1997, and look what happened. Obama hasn’t even signed the new bill and critics are already predicting the new policy will fail based on rosy assumptions about its effectiveness … meaning someday, we may need a doc fix fix fix.