Medicare Payments to Physicians

After enacting another short-term ‘doc fix,’ Congress may finally have a permanent solution in its sights.

A problematic formula for paying physicians under Medicare has been in place for years and, since 2003, has stipulated that there should be mandatory cuts in payments to doctors. The goal is to ensure that spending does not grow faster than the increase in the gross domestic product (GDP).

However, physicians have had no incentives to limit the number of services they furnish, and Congress has consistently in recent years postponed pay cuts to physicians and instead approved small fee increases or frozen the rates to prevent a decrease.

Many lawmakers might prefer a permanent solution so that they do not have to keep revisiting the issue. Most current proposals would have Congress set Medicare physician payment rates in advance for some fixed number of years.

This Health Policy Brief examines the various proposals and their possible effects on federal spending and on health care providers, and was published online on February 13, 2013 in Health Affairs.