Lawmakers Reach Deal on Doctor Payments

Five-Year plan would settle how physicians are reimbursed by Medicare, end recurring ‘Doc Fix’ Issue in Congress.

Congress enacted a law which reduces Medicare reimbursements paid to Physician and related to treatments provided to Medicare patients. The five year law addresses Medicare physician reimbursements and gives doctors clarity regarding future compensation, and even gives them potential incentives if Physicians agree to have their reimbursements based more on patient outcomes than on the traditional fee for service (volume of services provided).

House and Senate lawmakers have agreed on a five-year plan to change how physicians are paid for treating Medicare patients, an issue that has created a recurring scramble in Congress for over a decade.

Under the deal announced Thursday, Medicare would increase the amount it pays physicians by 0.5% each year for the next five years. The agreement was the result of talks that included the top members of the Senate Finance, House Energy and Commerce, and House Ways and Means committees.

The new bill would also offer bonuses to health-care providers that agree to have their reimbursements based more on outcomes than on the volume of services they provide.

The rates, a perennial issue in Congress since the early 2000s, stem from a 1997 budget law aimed at restrained the growth of Medicare payments. That law set a formula for physician rates that tied payment increases to economic growth, but when health-care costs rose faster than economy, Congress began to override the formula, in what became known as the “doc fix.”

Under pressure from doctors and other providers that had sought predictability, members of Congress from both parties had been looking for a way to avoid the steep cuts, whose impact has grown over time. This year, for example, Medicare payouts would have dropped by about 24% had Congress not agreed to a three-month postponement in December. Energy and Commerce Chairman Fred Upton (R. Mich.) called the agreement a “milestone.”

It wasn’t yet clear, however, how the repeal of the 1997 measure would be funded, or if lawmakers have reached a consensus on that. Aides said they were still waiting for a precise price tag for the agreement.

Physician groups including the American Medical Association praised the bill.

“Now Congress is closer than it has ever been to enacting fiscally prudent legislation that would repeal Medicare’s fatally flawed sustainable growth rate formula,” said Ardis Dee Hoven, president of the AMA.

Hospitals, in particular, have readied themselves to fight in case payments to the facilities are cut to underwrite the deal on physician’s payouts. The Federation of American Hospitals, the industry group representing for-profit hospitals, ran a chart describing recent cuts on its blog earlier this week, under the headline, “Enough is enough.”