The Cost to the Docs….It Just Keeps On Coming!


There does not seem to be a consensus on whether the Affordable Care Act(ACA)/Obamacare really is saving the healthcare system, companies and the rest of us any money at all. One Arkansas doctor, Kathryn Chenault reports that Obamacare fails to deliver in reducing health care costs. She writes in USA Today, “Every year, lawmakers wrap health care providers like me in ever-tighter reams of red tape.” She explains how this is making things worse for her and other doctors:

For me it was amazing to read the original ACA and see it morph. By October, the law had already created 11,000 pages of regulation. It has added thousands more since. Doctors, hospitals and insurers must hire armies of lawyers and administrators to make sense of this system. This leads to mountains of paperwork. Dr. Chenault further comments that she had to hire extra staff to fill out forms, file them and fax them. Even for a private practice doctor like her, this dramatically increases costs while worsening the patient’s experience. This also explains why doctors rarely spend enough time with patients. They’re forced to do paperwork, too.

The end results are higher health care costs for all involved, patients, employers, physicians and the healthcare facilities.

Consider that complex Obamacare regulations also frustrate employers as Katie Mahoney, Executive Director for Health Policy at the U.S. Chamber, recently explained to Members of Congress: First and foremost, the greatest complaint we hear from our members is about the extraordinary expense of complying with the reporting requirements. This includes challenges with identifying which employees are full-time during which months as well as, for those employers that self-insure, challenges with collecting social security numbers for dependents.

“Businesses must redirect resources to report on the coverage they offer, rather than use those resources to pay for a greater portion of the cost of that coverage,” she added.

Regulation-writing bureaucrats in Washington, D.C., aren’t the answer to making health care more accessible and affordable. For solutions, check out the recommendations in the U.S. Chamber’s Health Care Solutions Council report that are based on innovative efforts employers are taking to control costs and improve health care quality.

I have already pointed out in previous posts the ridiculous cost to middle Americas, the hard working people, who really pay the bills. They are paying more for premiums and getting less for their investments with higher co-payments, deductibles and more restrictions as to which physicians they can seek for their health care. How does that improve the delivery system?

This brings me to the present situation, a fix for the SGF or the Sustainable Growth Rate or “doc fix” plan. (The Medicare Sustainable Growth Rate (SGR) is a method currently used by the Centers for Medicare and Medicaid Services (CMS) in the United States to control spending by Medicare on physician services. Enacted by the Balanced Budget Act of 1997 to amend Section 1848(f) of the Social Security Act, the SGR replaced the Medicare Volume Performance Standard (MVPS), which was the previous method that CMS used in an attempt to control costs. Generally, this is a method to ensure that the yearly increase in the expense per Medicare beneficiary does not exceed the growth in GDP. Every year, the CMS sends a report to the Medicare Payment Advisory Commission, which advises the U.S. Congress on the previous year’s total expenditures and the target expenditures. The report also includes a conversion factor that will change the payments for physician services for the next year in order to match the target SGR. If the expenditures for the previous year exceeded the target expenditures, then the conversion factor will decrease payments for the next year. If the expenditures were less than expected, the conversion factor would increase the payments to physicians for the next year. On March 1 of each year, the physician fee schedule is updated accordingly. The implementation of the physician fee schedule update to meet the target SGR can be suspended or adjusted by Congress, as has been done regularly in the past (a doc fix).

Below shows the cost of the past decades of temporary patches for the SGF.


A permanent “doc fix” plan—negotiated by House Speaker John Boehner and Minority Leader Nancy Pelosi—will need to gain traction in the coming days if it’s going to have a realistic shot at enactment.


That’s because both the House and Senate need time to consider a permanent fix before Congress adjourns for spring break at the end of the month.


Congress has until March 31 to take action on the issue. Otherwise doctors would face a 21.2% decrease in payments for treating Medicare patients. What does that mean to patients? With the proposed 1% penalty that physicians will suffer if they don’t have the updated electronic medical records reporting system the 21.2% decrease in payment for treating Medicare patients will force many physicians to limit the percentage of Medicare patients that they can treat or declare bankruptcy.


While talks continue in the House and some objections have surfaced, the contours of the deal that emerged on Friday continue to tenuously hold, according to lobbyists and staffers tracking the issue. The $215 billion package would include permanent repeal of Medicare’s sustainable growth-rate formula, a two-year extension of the Children’s Health Insurance Program and a two-year extension of a package of healthcare-related tax and spending provisions.


“Cautiously optimistic is the way that I would describe my feeling about the situation,” said Rep. Renee Ellmers (R-N.C.), who sits on the Energy & Commerce Committee. “I am confident that it can be done.”


“I believe the leadership is committed to it on both sides of the aisle,” said John Rother, president of the National Coalition on Health Care, a nonpartisan advocacy group. “I give Boehner a lot of credit for making this happen and for being flexible enough in the negotiations to get this far.”


Only about a third of the projected spending is offset by corresponding cuts. That will make the plan toxic for some fiscal conservatives. But at least one conservative voice—the Wall Street Journal editorial board—has given its blessing to the emerging deal.


“Conservatives are supposed to understand that price controls distort markets and don’t work,” the paper opined over the weekend. “So much the better if reasonable Republicans and Democrats can agree to commit the SGR to the glue factory.”


The $70 billion in offsets are expected to be roughly split between cuts to providers and changes to Medicare benefits. The latter include eliminating Medigap plans with no deductible and requiring those customers to spend at least $250 out of pocket before coverage kicks in. But current holders of first-dollar-coverage supplemental plans would be grandfathered in and those plans wouldn’t be eliminated until 2020.


The proposal also includes increased out-of-pocket costs for wealthier Medicare beneficiaries. But the increased expenses would only apply to individuals who are already subject to means testing, currently individuals with incomes above $85,000 and couples with incomes above $170,000. According to a Democratic staffer familiar with the discussions, the increased costs in the SGR proposal would only apply to beneficiaries with incomes well above $100,000.


“I think it’s fair to say that beneficiary groups, including AARP, are not thrilled with this idea,” said Rother, a former longtime lobbyist for the senior advocacy group.


Democrats have typically balked at any Medicare benefit reductions. A significant slice of their caucuses could balk at supporting the package if those cuts run too deep.


The Senate has played a passive role in the negotiations, although the top Republican and Democrat on the Finance Committee have both praised the House’s work on the issue. However, Senate Democrats have warned that they might not be willing to support a package that doesn’t re-authorize CHIP for four years, as reported by the Associated Press.


“While a two-year extension of CHIP is encouraging, a four-year, clean extension of the program is necessary to ensure stability and certainty for states and families,” said a spokesman for Sen. Sherrod Brown (D-Ohio), the chief sponsor of a four-year CHIP reauthorization bill, in a statement. “Until the details of this deal—including how this is paid for—are shared with the Senate, it is unclear whether or not this is a package Senate Democrats could support.”


There could also be an effort to sweeten the deal with policy provisions that are important to individual members. But any additional proposals could also cause complications.


“I think there will be policy riders in order to get some folks to sign on,” said Julie Scott Allen, senior vice president with the District Policy Group at Drinker Biddle & Reath. “This is the one big thing to move so folks are gunning for it.”


The window is very narrow to get a deal done. Most healthcare policy watchers believe that the Senate will have to agree to take up any legislation as passed by the House. As one GOP Senate staffer pointed out, Boehner wouldn’t have stuck his neck out this far if he didn’t have some kind of tacit agreement with Senate Majority Leader Mitch McConnell that he could get it through the Senate.


“They’ll have to really cook this with the Senate for that to occur. There’s just no time,” Allen said. “I’m still putting my bet on at a bare minimum we’re looking at a couple month delay.”


The GOP Senate staffer assessed the odds of passage as “plausible, but unlikely.” “Are there a sufficient number of members of both parties who are willing to come together to get this done in whatever configuration it takes?” this person asked. “Can you get enough votes to make this damn thing go away?”


However, my specialty society, the American Society of Plastic Surgeons is breaking from the pack of healthcare organizations that support the new plan to pass the permanent repeal of Medicare’s sustainable growth-rate formula. Instead, the society is voicing its opposition to what it calls a 10-year pay freeze incorporated into the proposal.


“Right now, this bill to us is a bill that everyone is just rushing to sign to get this SGR thing out of the way,” said Dr. Scot Glasberg, president of the society. “We’re tremendously thankful that there’s bipartisan support for getting it done, but getting it done doesn’t mean sweeping it under the rug, it means actually coming up with something meaningful for physicians.”


The bill’s proposed fee updates of 0.5% annually for the first five years, followed by a 0% update for the following five years effectively freezes reimbursement rates for a decade, Glasberg said.


“You have to tell me one professional, one worker, one anyone out there who would agree to a 10-year freeze on their salary,” Glasberg said. “You can’t possibly survive at that rate when there are cost-of-living increases.”


As reported by Modern Healthcare’s Paul Demko, House Speaker John Boehner and Minority Leader Nancy Pelosi brokered a $213 billion deal that would overhaul SGR, as well provide as a two-year extension of the Children’s Health Insurance Program. Funding for the package would come in part through $70 billion in spending reductions split between cuts to Medicare benefits and reductions in provider payments.


Other physician groups, including the American College of Physicians and the American Academy of Orthopaedic Surgeons backed the bill, lauding the efforts of congressional leaders to get a deal done before the current temporary fix expires at the end of March. If nothing replaced that fix, doctors would have seen a 21.2% cut in their payments beginning April 1.


“We are pleased that the bill is fiscally responsible, by putting an end to the practice of Congress passing seemingly endless SGR ‘patches’ that each time have cost taxpayers tens of billions of dollars,” an ACP statement read. “ACP strongly urges both the House of Representatives and the Senate to pass this bill so it becomes law before the current, and we hope and expect, the final SGR ‘patch’ expires on April 1.”


Glasberg said he anticipates criticism of the bill will increase as more physicians understand its details.


“I really think physicians across the country don’t know what’s in this bill,” he said. “I think there needs to be more meaningful discussion on the elements of the bill.”

I believe that we are at the same state of affairs as discussed by our friend Mr. Gruber when he said that the only way that Obamacare was passed was because people were too stupid. Here again this flawed solution will be passed because the “facts” are so confusing, the cost of not passing any solution is so costly, and plain politics.


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