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Permanent Fix for Medicare Fees Seen

medicareBy Amy Schatz Dec. 9, 2013 7:35 p.m. ET

WASHINGTON—An annual push by doctors to delay cuts to Medicare patient fees is afoot, but this time the prognosis is better for a permanent solution to the long-festering problem.

The Senate Finance Committee is scheduled to vote Thursday on “doc fix” legislation that would permanently change how Medicare providers are paid by the government for their services. Similar legislation was unanimously passed by the House Energy and Commerce Committee in July.

Lawmakers and analysts say fatigue over dealing with the “doc fix” nearly every year for the past decade is driving the current bipartisan effort to resolve the issue.

An unexpected cut in the estimated cost of addressing the problem also has played a major role: On Friday, the Congressional Budget Office lowered its projection for the expense of repealing the current system to $116 billion over a decade, down from previous estimates that topped $300 billion at one point.

“From a budgetary standpoint, it’s easier now to fix it than it used to be,” said Mark McClellan, a senior fellow at the Brookings Institution think tank who ran the Centers for Medicare and Medicaid Services during the George W. Bush administration. “To spend all of this time and effort every year to just tread water in place is by no means the best use of everyone’s time and effort.”

The problem dates to a congressional measure in 1997 aimed at restraining the growth of Medicare payments. That law cut reimbursement rates through a formula that tied payment increases to growth in the economy. But health-care costs rose faster than the economy, and Congress has consistently acted to override the cuts that the 1997 measure prescribed.

This year brings a familiar deadline: If Congress does nothing by Dec. 31, Medicare reimbursement rates would drop about 24% in January. That is because the annual payment reductions the 1997 law envisioned never took place due to stopgap measures Congress passed.

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Doctors say such a drastic cut would make it harder to care for these patients, potentially leaving some seniors in the lurch.

Because lawmakers are soon set to recess for Christmas, most observers expect them to pass another short-term fix this month. But they say the new CBO projection offers promise for a permanent fix in 2014.

Doctors are tired of the annual uncertainty about Medicare payments, said Ardis Dee Hoven, a Lexington, Ky., doctor who is president of the American Medical Association. “We think the momentum is there for them to do it,” Dr. Hoven said.

The current system has left seniors and physicians “hamstrung by short-term patches instead of the certainty of a permanent solution,” House Ways and Means Chairman Dave Camp (R., Mich.) said last week.

Most proposals for a fix aim to prod doctors to save money for Medicare, which traditionally has allowed physicians to earn more by performing more procedures regardless of patient outcomes.

The Senate proposal, written with the help of House Ways and Means members, would freeze current Medicare rates over the next decade, but give extra payments to doctors who meet certain performance measures.

The AMA and other doctor groups say they agree with the idea of giving incentives to physicians who provide better care, but don’t think base rates should be frozen. The House Energy and Commerce bill would provide small annual increases, along with performance incentives.

The 2010 Affordable Care Act, also known as Obamacare, already includes some measures that tie Medicare reimbursement to performance, such as punishing hospitals that have excessive patient readmissions.

But these cost-saving measures aren’t expected to pay the entire price of a “doc fix.” No consensus plan for that has yet emerged.

Two years ago, the Medicare Payment Advisory Committee, a congressional group, released a list of potential cuts to fund the “doc fix,” including reducing the amount the government pays drug makers for prescription drugs for people who are eligible for both Medicare and Medicaid, the federal health program for lower-income people. The drug industry has opposed the idea.

On the policy side, “we have a pretty good idea of what people on both sides can accept,” said Rep. Michael Burgess (R., Texas), an obstetrician who helped write the House Energy and Commerce bill. But paying for it “becomes more problematic.”

This Article Originally appeared in the Wall Street Journal Dated Tuesday December 10th, 2013, and can be seen online HERE (Subscription Required).

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