Part of the fiscal cliff deal was to delay the Medicare reimbursement cuts that doctors were facing. Before the so called “doc fix” physicians who work with Medicare patients were facing a 27% pay cut in 2013.
Congress delayed the pay cut for this year, but the issue will come up again next year, and every year, until a permanent change is made.
The problem started when the Balanced Budget Act of 1997 included a payment formula aimed at keeping physician payments at a “sustainable growth rate” based on economic growth. For the first few years, doctors received a modest pay increase, but then in 2002, when the first pay cut would have taken place, doctors fought back and won.
Lobbyists for physicians convinced Congress to delay the pay cut in 2002. No pay cut has been implemented since then, resulting in a deferred pay cut of almost 27 percent. This time next year the total deferred pay cut will be over 32 percent.
The Medicare Payment Advisory Commission (MedPAC) says the formula passed in 1997 is flawed and that there are other ways to address the deficit.
Hospitals will absorb the cost of the “doc fix”. Instead of cutting payments to Medicare physicians, hospitals will lose $10.5 billion in Medicare payments over a 10-year period and Medicaid payments to hospitals will also be reduced, to the tune of $4.2 billion.
Why should you care about the “doc fix”? Well, first, hospitals say that the cuts they are being forced to endure will affect their ability to provide care for patients.
Second, many doctors are leaving Medicare patients behind as a result of the unpredictable Medicare funding, making finding a Medicare physician increasingly harder. It is estimated that 10,000 people become eligible for Medicare every day, but in 2012 one third of people looking for a new primary care physician who accepted Medicare had trouble finding one.
Bottom line, Medicare payment cuts – whether it’s to the hospital or doctor – will hurt the people who rely on Medicare, the patients.