Medicare’s Sustainable Growth Rate (SGR) formula, put in place by the Balanced Budget Act of 1997, was meant to control costs in Medicare by automatically reducing doctors’ pay. But without fail since 2003, Congress blocks SGR’s implementation each year. This is called a “doc fix.”
The annual “doc fix” undermines the original purpose of the formula: to control Medicare costs. But allowing the SGR formula to take effect would lead to other problems. More than 50 million seniors depend on Medicare for health insurance. If physician reimbursement becomes too low, more and more doctors will close their doors to Medicare patients in favor of patients with private insurance. The government needs realistic, market-rate reimbursement policies to ensure that Medicare patients have access to the care they need.
The temporary “doc fix” process is also fraught with politics: Congress often uses the annual doc fix to strike other budgetary deals, and increase contributions from medical associations. Allowing the unrealistic cuts to remain on the books also allows Congress to mask the real, long- term costs of our government health care programs.
Clearly, the current system is broken. We need a permanent doc fix to remove doctor pay from Congressional politicking, give certainty to Medicare doctors and patients, and enable realistic cost estimates for our government health care programs. Payment reform should both treat doctors fairly and put Medicare on a fiscally-sustainable path.