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'Doc-Fix' Uncertainty Hangs Over Physicians' Care, Purchasing Decisions

By Kerry Young, CQ HealthBeat Associate Editor

October 27, 2014 -- Lacking clear signals from Congress on what Medicare will pay doctors after March 31, physicians say they are proceeding cautiously on initiatives such as a move to more coordinated care and increased use of technology.

Congress is expected to act again act to stop a 17-year-old budget mechanism known as sustainable growth rate (SGR) from taking effect and triggering deep cuts in doctors' Medicare reimbursements. Seventeen so-called 'doc fix' laws have been enacted since 2003 to block cuts, with the most recent patch (PL 113-93) holding off a mandatory reduction through March, according to the Congressional Research Service.

Doctors and executives making financial decisions about physician practices remain wary. Congress did allow the SGR mechanism, created as part of the 1997 Balanced Budget Act (PL 105-33), to trigger in 2002, resulting in a 4.8 percent payment cut. With repeated "patches," or bills that since have held the mechanism at bay, the level of scheduled cuts has risen to more than 20 percent.

"It doesn't make sound business sense to say 'We'll just assume that they are not going to do it and that it's going to be okay," said Michael L. Munger, a family practice physician at Saint Luke's Health System in Kansas. He said uncertainty prevented the system from hiring about seven nurses for a patient-centered medical home project.

There's deep bipartisan agreement that the formula needs to be replaced, but no agreement on how to cover the approximately $140 billion cost. As designed, the SGR underestimates the degree to which the volume and complexity of doctors' services increases, according to an analysis from the nonprofit Center on Budget and Policy Priorities. Discussions on a 10-year patch intended to help shift Medicare away from its heavy reliance on fee-for-service payments faltered earlier this year over the question of offsets.

Congress doesn't seem to fully appreciate how the continual questions about Medicare's payments to doctors take a toll on doctors, said Lloyd Van Winkle, a family-physician who practices in central Texas.

"They can sit around there and chit chat about it, but it is not without serious consequences," he said.

Lawmakers have a few times allowed a previous patch to expire before getting a new one in place, notably in 2010 when there was a gap of nearly a month. Congress in that case acted to make the SGR payment override retroactive.

Doctors say such delays prove costly. Van Winkle, for example, once had to talk with his bank about a line of credit in case a disruption in Medicare payments threatened his ability to make his payroll and say in good stead with his suppliers.

"I cannot get the creditors to allow me to pay them retroactively," as Medicare can do for doctors, Van Winkle said. "They want to be paid right now or they won't ship" supplies, such as doses of flu vaccine.

The annual challenge of managing around the doc fix, combined with other cost-drivers such as the push to adopt electronic health record systems, is helping drive some doctors away from running their own primary care practices, Van Winkle said. They may sell out and take jobs with hospitals or insurance companies, he said.

Van Winkle, who had to pay about $2,500 for a portal in his electronic health record system that allows enhanced communication with patients, said he can't bill for this service. The doc fix "comes along on top of everything else that has been piled on medicine in the last 10 years, and some doctors are just fed up," he said.

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