Fixing Doctor Medicare Pay

Once upon a time, 1997 to be precise, Congress designed a formula to be used each year to establish doctor pay for Medicare recipients. The idea behind it was to make sure doctor expenses didn’t exceed growth in the Gross Domestic Product (GDP).

The formula came to be known as the SGR (Sustainable Growth Rate). It was based on 4 factors: 1) % change in physician fees; 2) % change in average number of Medicare fee-for-service market; 3) % 10 year average change in GDP per capita; 4) % change in Medicare expenditures.

The SGR had one problem. It didn’t work. Every year it cut doctor fees to levels doctors couldn’t tolerate, Furthermore, if implemented it might result in doctors abandoning Medicare. Eighteen times Congress had to step in and create a “patch” or “fix”.

This year is no exception. The SGR calls for a cut of 20%. This year \pne difference is the GOP Congress is pushing for a permanent fix. The fix would cost $174 billion. It won’t come easily, and another short-term patch of 3 to 6 month is likely. It will require compromise, probably involving continuation of the Children’s Health Insurance Program (CHIP). The tone in Congress is that the time has come to retire a federal program that doesn’t work with something that ensures physician participation in Medicare.