What You Need to Know About the Doc Fix

Medicare services office
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In case you have been wondering about all the articles in the news the past few years about the doc fix or the doc pay fix, or the SGR debate, hopefully, this article may help you make sense of it all.

What Is SGR?

SGR stands for "Sustainable Growth Rate." The American College of Physicians website provides a comprehensive overview of the SGR, and why it is a "fatally flawed" concept resulting in an ongoing debate about physician pay.

According to ACP online, the SGR "formula was enacted by Congress as part of the Balanced Budget Act of 1997 (BBA). The formula limits growth in spending for physicians’ services by linking updates to target rates of spending growth."

The SGR formula directly impacts how much physicians are paid for treating Medicare patients, who are over the age of 65. Medicare is the government-funded insurance program designed to help cover the aging population.

Who Does the SGR Debate Impact the Most?

The SGR and the Medicare cuts potentially resulting from it, would most significantly and directly impact physicians who treat older patients. If the SGR situation is not resolved, the pay cuts could be so damaging, it could potentially force some physicians out of practice, which would in turn greatly affect senior patients.

For many physicians, the majority of their practice may consist of Medicare patients. Therefore, a steep cut in Medicare reimbursements would significantly impact their overall income.

The ACP's summary of the SGR situation goes on to say:

"The SGR formula does not control volume... It cuts payments without regard to the quality or efficiency of care provided by an individual physician. Every year since 2001, the current, fatally flawed SGR formula has threatened to impose steep cuts in Medicare physician fee schedule payments for care provided to America’s seniors."

What Is the "Doc Fix" Debate About?

The debate is largely about whether or not the law should be repealed and replaced, to avoid future cuts, but the cost of doing so is very high. The ACP's official stance is that the law should be repealed and replaced with a better, more realistic, and fair pay formula for Medicare reimbursement.

The cost of doing so would be about $138 billion, which is down from $245 billion estimated in 2012, according to the ACP.

Because the cost of repealing the law is so high, Congress continues to do a temporary fix to override the SGR adjustment and subsequent pay cuts each year, which also costs a lot of time and money. Also, because it is not a permanent solution, the temporary legislation leaves physicians' practices, and senior patient care, hanging in the balance every year when the temporary fix expires.

What Is the Solution?

That's where the debate heats up to a firestorm. Some people think that repeatedly implementing temporary fixes is the only answer, because repealing the SGR law is so extraordinarily expensive, but leaving the SGR rate alone would result in crippling pay cuts for physicians, it could damage the workforce irreparably.

It's an extremely complex issue, and any potential permanent solution would likely have detrimental unintended consequences, as most complex legislation does.

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