The Doc Fix and the ICD-10 Delay - What Does It Mean For Your Practice?

After months of speculation, the United States Senate chose Monday to pass the "Doc Fix" bill (H.R. 4302 - Protecting Access to Medicare Act of 2014) that had been passed by the U.S. House just days earlier. The Doc Fix has become the nickname for the perennial political theater that surrounds the delay of enacting Medicare physician payment cuts that were originally ordered under a program called the SGR or Sustainable Growth Rate. When the SGR was passed as part of the 1997 U.S. government budget, the idea was to peg Medicare spending increases to the growth of the economy, which would gradually lower rates of payments to doctors and facilities that see Medicare patients.

Why doesn't the SGR work?

Unfortunately, the cost of healthcare in the United States has risen far faster than the GDP (Gross Domestic Product, or total economic output of the US). The SGR mandated that if growth in Medicare payments exceeded growth in GDP, Medicare payments would have to be cut. However, these cuts soon became increasingly politically unpopular - not just with physicians, but with Medicare patients, who worried that decreased payments from Medicare would make it harder for them to find and see a doctor. In 2003 the first Doc Fix was passed to alleviate these fears. The Doc Fix simply delays the payment adjustment to Medicare providers, and amends the law to not calculate future payment adjustments based on the delay, or any temporary payment rate given to doctors. In other words, it "kicks the can down the road."

Why are cuts to physician payments untenable?

This Doc Fix dynamic has continued for the past decade in sort of a political avalanche. Because the Doc Fix delays the payment adjustment, the adjustment that the SGR requires will be even bigger after the delay. Since "kicking the can" also means making the looming cuts worse, when the cut is actually about to arrive, there is even more urgency from physicians and seniors, and as has happened seventeen (wow!) times now, a fix is put in place. The cut that was supposed to take place April 1st 2014 was 24% - a number which all sides agree would drastically shock the system, hurt physicians and limit access to Medicare patients. There is no question that if the cut ever takes place, physicians would stop accepting new Medicare patients and many physicians would opt out of Medicare entirely. Keep in mind that the current Medicare payment rate cannot support a physician practice - no independent physician could survive with just Medicare patients at the current rate, much less a 24% cut.

Why can't everybody just get along?

The situation is frustrating and anxiety-producing, but getting both sides to agree to a permanent Doc Fix has proven elusive. The implementation of the SGR was supposed to address out-of-control public spending on Medicare, and as such, the savings that were supposed to come from the SGR are calculated in any estimation of the CBO (Congressional Budget Office.) To permanently replace the Doc Fix, money would have to be spent to replace the "savings" lost. The Doc Fixes so far have cost about $150 billion over ten years. Mind you, Medicare payments to physicians account for a small part of the total Medicare bill (only 13% in 2012) something that many people tend to miss in the conversation.

A stowaway onboard the H.R. 4302

A new twist on this year's Doc Fix was the addition of language delaying the ICD-10 implementation for another year. The ICD-10 delay goes hand in hand with delaying SGR cuts really, because they both have become almost annual traditions. The International Classification of Diseases listing is the system we use to to attach diagnoses to medical claims when they are sent to insurance companies. Currently, we use ICD version 9, even though ICD 10 has been ready for about two decades now, and the rest of the world is already using it. They are using it however for population health data, not as a reimbursement tool. That is where the U.S. differs. There are many more ICD codes in version 10 than there are in version 9, and so the switchover (originally slated for 2011) has been delayed another year. This delay is ultimately good news for independent practices, who are dependent on software vendors to get the software updated before ICD-10 training could take place. Another year to get ready should be good for independent practices, although hospital-owned practices and hospitals have already invested a lot of time and money, and will have to twiddle their thumbs for the next 12 months.

p.s. What about that new CMS-1500 02/12 form that we're supposed to use starting April 1, 2014?

Nothing has changed - the new form is in play!

Mary Pat Whaley and Abraham Whaley are Physician Advocates and Consultants who blog at Manage My Practice; their LinkedIn Group by the same name is for those interested in healthcare management. You can contact Mary Pat at [email protected].