If Congress Doesn’t Act Soon, Doctors Will See a Huge Cut in Medicare Payments

It's time once again for one of Congress's most mind-numbing rituals: a "doc fix."

Doctors will see a cut of more than 20 percent in their Medicare payments unless Congress steps in by the end of the month. Congress almost surely will step in—it always does. And it will probably just delay the cut for another few months—as it always does.

At the moment, most signs are pointing to yet another temporary patch in doctors' pay, which would be offset with cuts to hospitals and an extension of certain cuts from sequestration. The precise length of the patch hasn't been determined, but health care lobbyists say three months or six months appear to be the leading options under discussion.

It would be the 18th time in 13 years that Congress has temporarily blocked the payment cuts, which it mandated in 1997.

There's bipartisan agreement on the need for a permanent solution, and on the substance of that solution: Identical bills in both chambers would end the parade of temporary patches and replace Medicare's payment system. But there's no consensus on how to pay for it, leading to the constant short-term extensions.

A lobbyist following the issue, who declined to speak on the record because conversations are still preliminary, said negotiators in the House are trying to put together a package that would pair the permanent doc fix with a handful of health care priorities from each party—perhaps balancing certain GOP-backed entitlement cuts with concessions to Democrats on reauthorizing the Children's Health Insurance Program.

But a temporary patch is always the safest bet. Experience does not suggest that Congress can reach a bipartisan agreement on entitlement programs, including somewhere between $70 billion and $170 billion in Medicare cuts, in three weeks.

If anything, another short-term fix might give lawmakers some breathing room to work out a long-term agreement—although that has been the rationale/rationalization for several stopgap measures before this, and all that breathing room doesn't seem to have produced much.

A three-month patch might help appease lawmakers who want to keep the issue coming back, to help build support for a permanent solution. A six-month fix would set up another Medicare cliff in September—the actual deadline to reauthorize CHIP.

And maybe lawmakers could pair CHIP with the doc fix, if they can find bipartisan agreement on both. Maybe September will be that magic moment when Congress finally decides to solve a problem it created.

It's worth remembering, though, that lawmakers' inability to pass a permanent doc fix has already transcended any number of strong incentives to do so.

The last temporary doc fix pushed Congress past a key threshold: It had spent more on short-term patches than it would have cost to simply replace the formula.

The Congressional Budget Office had essentially put the permanent doc fix on sale, slashing its cost estimates of the proposal thanks to the historically slow growth in health care costs.

But those savings won't last forever: CBO has already raised its cost estimate by some $30 billion. Health care inflation will likely pick back up as the economy continues to improve.

Some policy experts argue that the parade of temporary doc fixes isn't so bad. The whole point of building automatic cuts into Medicare's payment formula was to keep federal health care costs under control. And while Congress has never let those particular cuts take effect, it almost always offsets that choice with other health care cuts.

So, although it's happening somewhat by accident, the formula is still succeeding at its basic mission: It has prompted Congress to pass roughly $140 billion in deficit reduction, according to the Committee for a Responsible Federal Budget.

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