THE BLOG
03/27/2014 02:41 pm ET Updated May 27, 2014

Partisan Politics Torpedos Long-Overdue 'Medicare Doc Fix'

It's amazing how quickly political priorities can overrule good governing. Last month, it seemed that a bipartisan and permanent "Medicare doc fix" was finally in the offing. The fix would replace an existing formula that threatens to impose a 24 percent pay cut on all Medicare doctors starting April 1.

Yet thanks to the inclusion of a "partisan" funding provision, the new "Medicare doc fix" now has become tied to the 51st attempt by the House of Representatives to repeal or dismantle the Affordable Care Act. And that has placed the future of the bipartisan deal in jeopardy.

It's important to start with this: The Medicare pay cut has nothing to do with the Affordable Care Act. It stems from the Balanced Budget Act of 1997, passed when Bill Clinton was president, Republicans controlled both houses of Congress and Newt Gingrich was speaker of the House.

In 1997, Congress was concerned that Medicare spending was growing too fast and that the program would become insolvent if something wasn't done. As a result, the Balanced Budget Act replaced the formula for calculating reimbursement rates for Medicare providers (the Medicare Volume Performance Standard, or MVPS) with a new one called the Sustainable Growth Rate formula, known as SGR.

The idea behind SGR was to make sure that Medicare spending per beneficiary would grow no faster than the U.S. economy. If Medicare expenditures for the previous year were higher than the SGR formula, then payments to Medicare providers would decrease the following year. Unfortunately, Medicare expenditures almost always grew at a much faster rate than the economy, and the result was a never-ending succession of provider cuts.

Congress soon realized that implementing these pay cuts would cause doctors to see fewer Medicare patients or to drop out of the program altogether, which would cause seniors to lose access to their doctors. As a result, both Republican and Democratic Congresses regularly postponed them. Since 2003, these SGR payment reductions were waived 15 times, at a total cost of more than $150 billion. At the same time, Medicare spending per beneficiary grew from $1,823 in 1995 to more than $5,100 today. Bottom line, SGR didn't work.

Despite the increasing cost and number of postponements, Congress never offered a realistic proposal to replace the SGR formula until this year. The proposed solution was the result of a bipartisan negotiation between top Republicans and Democrats on the Senate Finance and the House Energy and Commerce and Ways and Means committees. This was a rare event, especially in an election year.

The proposal would repeal SGR and replace it with a new formula that would tie physician payments to quality metrics rather than fees for services. Provider reimbursement would be based upon treatment outcomes as opposed to the number of tests or services scheduled and used. All of which represents a groundbreaking shift in our national health strategy - a shift that could well reduce federal health care spending and overall health care costs.

In all fairness, the proposal wasn't a plug-and-play solution. America's health care system is not designed to do a lot of the things the plan calls for, such as identifying the most efficient way to provide care or providing an across-the-board measurement of care quality. But this is a direction that the industry will have to follow in order to reduce costs and improve outcomes. Employers and insurance carriers are already doing so and will likely force the health care industry to follow.

The hope on Capitol Hill was that this proposal would finally steer us away from our very costly and impractical method for paying Medicare doctors. Given the bipartisan support, policy-makers believed that the plan could be implemented and improved over time.

But once again, partisanship found its way into the debate. Congressional Democrats and Republicans began fighting over how the proposal would be paid for. According to the Congressional Budget Office, the new formula would cost about $138 billion over the next 10 years. The majority of this additional spending would be needed to offset the scheduled payment cuts under the existing SGR formula.

The congressional committees that crafted the solution floated a comprehensive list of budget savings to pay for these reforms. Instead of seriously reviewing these potential offsets or offering offsets that could lower costs and support improvements in care, the House chose a different path. House Resolution 4015 was introduced with a "pay-for" provision that would fund replacement of the SGR by delaying the individual mandate section of the Affordable Care Act for five years. That provision, which would significantly hobble the ACA, has no chance of success with the Senate or the president. The resolution passed on a near-party line vote. Only 12 Democrats running in conservative districts voted in favor of the bill.

In response, the American Medical Association sent a letter to House leadership expressing its "profound disappointment that a strong bipartisan, bicameral effort to repeal the Medicare sustainable growth rate (SGR) has become a victim of partisan approaches to resolve budgetary issues."

So, once again, we see how party politics and midterm election strategies threaten solutions to long-standing problems that directly impact Americans.

At best, Congress will propose another temporary nine-month patch to avoid the April 1 pay cut. That temporary patch will cost a minimum of $15 billion-$6 billion of that will come from cutting payments to hospitals, while funding for the remainder has yet to be identified.

As we have seen too often over the last four years, political partisanship produces meaningless maneuvering that comes at a high cost. Instead of a real effort to manage Medicare spending, H.R. 4015 is nothing more than one more attempt to dismantle "Obamacare."

We've seen this movie too many times.

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