The Doc Fix Returns

The collapse of the Congressional Deficit “Not-So-Super-Committee” ushered in the return of the “doc fix”.  With only days left in the Congressional session, lawmakers will be scurrying to address several key healthcare issues, including the imminent 27% physician cut to Medicare FFS rates to physicians, and also the 2013 sequestration across the board cuts to Medicare of 2%.  2012 is an election year.  The last thing the President and Members of Congress want is 600,000 members of the American Medical Association declaring war on January 2.

The most time-sensitive remains the doc-fix, as the 27% cut goes into effect on December 31, 2011, if lawmakers do not offset it. Every year since 2002, Congress has “kicked the can” a year or two down the road with temporary fixes.  A permanent fix holds a price tag of almost $300 billion, and the hope was the “Supers” would get to it.  They didn’t, and a permanent fix is WAY out of reach now.

What seems likely is another retroactive adjustment early next year. Lawmakers are considering a 1- or 2-year fix costing $20.6 billion and $38.6 billion, respectively, with possible offsets including reductions to other providers.  I’d expect another string attached will be that docs that don’t hit their quality measures will take the cut, while high-performing providers will get the fix. This is an important issue way beyond physicians: if Congress doesn’t get a fix done, Medicare Advantage rates will get hit in 2013 by as much as 1-2%.

While the doc fix will be addressed as soon as this week, don’t expect any “holiday surprise” of a grand bargain on the sequestration cuts or deficit reduction given the political chasm between the parties and the upcoming election. Congress will do the bare minimum to avoid a “white-coat insurrection” but will punt the broader debate on austerity measures for Medicare and Medicaid to the voters next year.