Doctors Avoid Medicare Pay Cut for Another Year—but Then What?

Kathryn Nix / December 07, 2010

Senate leaders reached an agreement Monday to delay cuts to physician reimbursement rates under Medicare for one year. The details of the negotiations have yet to be ironed out, but if the deal makes it through Congress, doctors will avert a 23 percent pay cut scheduled for January 1.

Heritage health policy expert Bob Moffit explains in a recent post that the Sustainable Growth Rate (SGR) formula, enacted in 1997, arbitrarily ties Medicare physician reimbursement to the overall performance of the economy, meaning that when payments grow faster than the economy, automatic reductions go into effect.

In theory, that is. Congress has continually delayed the reductions to avoid reducing seniors’ access to health care. (This delay is known as the “doc fix.”) As reimbursement rates drop, more physicians become inclined to limit the number of Medicare patients they see. Some are even forced to stop accepting Medicare altogether. As Congress continues to stop the cuts from going into effect, they accumulate, so failure to act now would serve doctors a crippling 23 percent pay cut in 2011. (more…)