Congress has struggled with how much the US should pay doctors who serve Medicare patients ever since the program for seniors was created in 1965. Congress blew through two reimbursement formulas before settling in 1997 on the Sustainable Growth Rate (SGR), which linked payments for physicians to the rate of growth of the economy.
But health costs are increasing at a faster rate than is the overall economy. As a result, the SGR was $1 billion short of covering the actual costs of caring for Medicare patients by 2003. Ever since, Congress has approved short-term funding, or the so-called doc fix, to fill the gap – often several times in the same year.
Last year Congress passed five emergency doc fixes, including a one-year, $19 billion fix in December to keep physician payments stable through 2011. House Republicans now propose a two-year, $14.9 billion doc fix, expected to keep physician salaries stable plus a 1 percent raise through 2013. It is expected to cost $39 billion. If Congress doesn’t act, Medicare payments to doctors will drop 27.4 percent, beginning Jan. 1.