A bill proposing a new formula for calculating Medicare reimbursements to medical providers is set to hit the floor of the U.S. House of Representatives any day now. This bill, which has bipartisan support, is intended to update the currently used formula that was established in 1997. That formula, which linked medical providers’ pay increases to economic growth, has created some significant backlash, as:
- Health care costs have risen faster than the U.S. economy has been growing.
- The formula has been “overridden” by Congress numerous times via a process dubbed the “doc fix” ritual.
Proposed Solution: How the Bill Would Revise the Medicare Reimbursement Formula
To overcome these formula overrides and reduce the administrative headaches they tend to cause, the bill in question is proposing to:
- Provide medical providers with increases of 0.5 percent each year from 2015 through 2019 (before the transition to a new “incentive-based” system occurs)
- Encourage medical providers to adopt alternative payment models, with a bigger focus on patient outcomes.
Although the Congressional Budget Office has yet to release its estimates regarding the costs of this bill (and the changes it is proposing), about $35 billion of the cost would reportedly be offset by shifting them to Medicare beneficiaries (through, for instance, higher premiums for seniors with higher incomes, new costs for those using Medigap policies, etc.).
Clearly, there is still a lot of ambiguity regarding the details and potential impacts of this bill; however, what is clear at this point is that medical providers may face new challenges collecting payment for their services, particularly from Medicare patients.
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