What is 'Doc Fix' in the Medicare Debate and Why Does It Matter?

One item included in the recently-passed bill by Congress to extend the reduced Social Security payroll tax was the annual measure to temporarily prevent a reduction in Medicare payments to doctors; this year set at 27%. This action, referred to as “Doc Fix” is required because Congress refuses to find and implement a permanent solution to Medicare reimbursement rates. Congress cannot continue to take this band-aid approach. Unless a permanent fix is implemented we won’t have to worry about Medicare. Doctors will not accept Medicare patients.

The Balanced Budget Act of 1997 called for annual adjustments to amount paid to doctors under Medicare; the Sustainable Growth Rate (SGR). This is currently done by comparing the percentage increase in Medicare payments to doctors to the percentage increase in the GDP. This comparison is done the beginning of each year using data from the previous year. Based on a calculation that all admit is confusing, an adjustment is made to the payment amounts on March 1. However, Congress can set aside implementation and this is how doctors were facing a 27% cut this year.

While the annual SGR calculation may call for a small adjustment, the adjustments are cumulative. When Congress delays the required adjustment, it gets added into the next year’s requirement. Unless there is a permanent fix, next year’s adjustment is projected to be 32%.

This is nothing new. The last time the SGR adjustment was implemented was 2002. There is bipartisan agreement that a permanent “Doc Fix” is needed but no one wants to deal with it. Not only is a permanent fix just given lip service, there have been no real solutions proposed.

This does not bode well for those currently over 65 years, or the millions of baby boomers rapidly approaching this age. It also is a disaster for our active duty, reserve, and retired military personnel and their families since the payments to doctors under TRICARE, the Department of Defense’s primary means of providing medical care to those individuals, are tied to Medicare. This will have a negative impact on recruitment and retention, resulting in decreased readiness of our military forces to meet the demands the country places on them.

As more doctors stop accepting Medicare and TRICARE patients, whether because of uncertainty about the cuts or the implementation of them, costs will rise because there will be fewer providers.  Some seniors or military will be unable to find a doctor.

It is estimated that one in three seniors will need nursing home care. The average hospital stay for a Medicare patient is just under six days. Unless there is a permanent solution implemented for the calculation of Medicare reimbursement rates, these numbers will decline, not because of less need but because of less availability. That is not the desirable alternative.

There has been rhetoric of “death panels” during the current health care debate. If Congress continues to ignore the need for a permanent solution to the SGR or “Doc Fix,” heath care services to seniors may not be available inadvertently turning rhetoric into reality. 

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