Congress is within reach of trashing the old and unworkable formula that Medicare uses to pay doctors. The system that Congress replaces it with could represent a big step forward in improving the quality, and lowering the cost, of everyone’s health care.

The old formula was an attempt to limit growth in Medicare payments to doctors by tying them to broader economic growth. But when the expansion stalled, the formula called for a pay cut – and doctors revolted.

Congress reacted by passing what’s come to be called the “doc fix” – a temporary reprieve from the mandated pay cuts. The first of these was for 2003, and there’s been one every year since.

This is a lost opportunity. Because Medicare accounts for such a big share of health care spending, its payment policies influence practices in the rest of the industry.

Medicare currently works on a fee-for-service model, which encourages doctors to provide the greatest possible number of services. If its payments could be designed instead to make the quality of treatment matter more than quantity, that could reduce costs and improve care.

So it is a hopeful development that, with the latest fix due to expire April 1, Republicans and Democrats in the House seem close to agreeing on a new, quality-oriented payment system for Medicare.

The remaining hurdle is cost – an expected $200 billion over 10 years. But if a new payment formula can change the way doctors practice, the long-term savings and the improvement in public health may make it worthwhile.


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.