• How much would you pay for a doc fix?

    The principal obstacle to a permanent reform of the dreaded sustainable growth rate (SGR) formula that governs updates to Medicare physician payments has been the price tag. Good news! It just got cheaper, by almost half, reports Paige Cunningham of POLITICO.

    Efforts to finally get rid of that dreaded Medicare payment formula could see smoother sailing now that the Congressional Budget Office has sliced the price tag nearly in half. […]

    The CBO downgraded the cost of repealing the flawed formula from $243.7 billion to $138.3 billion. That significantly lightened the load for lawmakers who agree that they’ve got to scrap the formula but have been gridlocked for years over how to pay for it. Without a permanent solution, they frantically search for a last-minute, short-term “doc fix” year after year. […]

    Virtually everyone agrees the SGR formula must be fixed once and for all so that Medicare providers no longer face uncertainty about precipitous drops in reimbursement year after year. Congress narrowly averted a scheduled 27 percent cut that was to have taken effect on Jan. 1, but there’s another 25 percent cut looming next year.

    As the piece conveys, several doc fix proposals are circulating on the Hill. Others, as well as background on the issue, are offered in a Health Affairs/RWJF policy brief. See also the recent Kaiser Family Foundation compendium of Medicare reform ideas. Note, however, the price tags in these documents are no longer accurate. It’s far lower.

    My hope is that any permanent doc fix also fixes the distorted distribution of payments across physician types, about which I’ve written several times recently. Not to take this opportunity to begin to realign payment with more efficient and sensible practice (e.g., more for primary care, less for specialists) would be a tragedy.

    I wonder if a doc fix could pay for itself if it also substantially reformed the resource-based relative value scale (RBRVS) system that governs the relative rates Medicare and many private insurers pay physicians. After all, there is a connection between payments (and their distribution by provider type) with physician workforce (and its distribution by provider type). There is a connection between workforce (and distribution) and nature and volume of care. Consequently, an RBRVS reform must have some effect on aggregate spending. Anybody done work to figure out what that might be?

    UPDATE: Added last paragraph.


    • How/why did the CBO reduce the cost of the SGR fix? The post and the linked Politico story don’t explain what’s behind the new CBO estimate. Wouldn’t it depend on how the payment formula is fixed, as you suggest in the last paragraph? What assumptions did the CBO make in its “fix?” Did the assumptions change or did some other underlying projection change?

      • Reduced utilization and spending growth that has been observed recently. The extent to which the future will look like the recent past is speculation.

        • The A’s and the Orioles both made the playoffs last year, so naturally the same thing will happen this year.

          I really hope this is not how the CBO projects health care spending. It seems like every area of forecasting and prediction (e.g., hurricanes, voting, baseball, etc.) has multiple competing (and open source) models that are routinely tested for their accuracy. Is the same true for health care spending? Or are we just depending on black box forecasts that may be the equivalent of drawing a line through two points and calling it projected growth? I’ve never seriously tried to research it, but I would be interested to know more about how these health care spending forecasts are created.

    • With all due respect, it is time for commentators to back-off the proposals to cut specialists’ pay in favor of increasing primary care reimbursement. There are many reasons why specialists are paid more than primary care, not the least of which is the increased risk and intensity associated with many specialty services — particularly neurosurgery. Professional liability premiums are significantly higher, work hours are more substantial and training takes many more years to complete, Our country needs a robust and diverse physician workforce, but the idea that all will be right with our healthcare system if only we pay primary care doctors more at the expense of specialists is poppycock. No primary care doctor I know can yet remove a brain tumor or perform complex spine surgery or clip and aneurysm or stent an occluded carotid artery. These are delicate procedures that require well-trained — and adequately paid — specialists. Continuing to promote the battle between primary care and specialists is unproductive and distracts policymakers from developing a Medicare reimbursement system that is fair for ALL providers.

      For more thoughts on this topic, visit: http://www.neurosurgeryblog.org/2013/02/07/the-primary-care-shibboleth-debunking-the-myth/

      • Of course there needs to be “adequate” pay. No one has said differently. But your implication that doing something like a carotid endarterectomy deserves enormous compensation because it is “delicate” and requires “well-trained” physicians lacks any economic foundation. Once a physician has learned the skill, and the facilities have been invested in, the added cost of doing the surgery is not all that impressive. It doesn’t take long. And just because it uses fancy tools and techniques doesn’t mean it’s actually “worthy” of much more physician pay then spending the same amount of time with creating a good management plan.

        Note that I’m referring to physician pay here. The costs of the operation and the insurance cost obviously require a higher compensation globally.

        I’m just not convinced, especially as you clearly have such a vested interest. PS: the ratio of specialists to GPs is actually much higher in the US than average. That link you have claims otherwise.

        • Hmm. The graph I looked at for GPs is kind of difficult to interpret. It seems that IM docs and pediatricians aren’t GPs so the US probably has underestimated PCPs from my source. With adjustments it’s pretty even, so the ratio in US isn’t actually way off. Wish there were better definitions across countries

        • The Medicare reimbursement for a carotid endarterectomy is around $1100 depending on where you are located. This includes a pre-op H&P, immediate pre-op evaluation, around 2-3 hours of surgery, post op evaluation in the ICU and all post-op care for 90 days which generally would entail at least 3 visits. From this fee you must also cover your overhead including the exhorbitant fees a neurosurgeon is charged for professional liability insurance.
          This doesn’t take into account the prolonged training of at least 7 years, over half of which is spent making a residents salary while our primary care collleagues are already in practice. There is an opportunity cost to that lost time.
          All in all doesn’t seem enormous when considering all that is included