While traditional wisdom says doctors are among the highest-paid workers nationwide, how they get paid is wildly unpredictable. Nowhere is this more apparent than in Medicare reimbursement, which makes up nearly 25% of all physician practice income. Currently, Medicare physician reimbursement is consistently held hostage to scheduled White House cuts and last-minute increases from Congress.

​As Charles Sauer, president of the Market Institute, writes in his op-ed in RealClearHealth, America’s physicians can’t reliably predict their income or anticipate future costs if the government keeps getting between patients and their doctors. “Medicare’s payment system leaves independent physicians dependent on reimbursement rates set in Washington, and those payments are repeatedly subject to scheduled reductions and temporary congressional fixes even as the cost of running a medical practice rises.”

​This level of government intervention is an unfortunate placeholder for a working free-market healthcare system. But in the short term, doctors need assurances they can still run their practices. Moreover, patients still need to access care from their independent providers. The most popular solution in Congress now is the Patients First Act, a bill that would aim to tie Medicare reimbursement increases to inflation and the annual costs of running a practice.

​But as is, the Patients First Act could give taxpayers more than they bargained for: “The Patients First Act does not move us closer to a market-based healthcare system, but it would make Medicare’s existing physician payment system less damaging to independent practices and patient choice. Still, improving physician reimbursement should not become an excuse to expand government spending. In the short term, higher reimbursement will cost money, and Congress should offset that cost rather than simply adding it to Medicare’s tab.”

​Policymakers seeking to fix the bill must address two major problems. First, they ought to reform the mechanisms that make this bill inflationary, chiefly by indexing the bill's budget-neutrality threshold to inflation. A one-time payment increase is more than fair for America’s physicians, but asking taxpayers to foot the bill in perpetuity is unfair.

​Charles explains the next fix policymakers can make: find spending offsets for the bill in other areas of healthcare policy where lawmakers can cut spending.

​“Today, Medicare can pay more for certain services when they are delivered through a hospital-owned practice than when the same service is delivered by an independent physician. MedPAC has warned that this difference can encourage hospitals to acquire physician practices because hospital ownership can unlock higher Medicare payments. Site-neutral reform would reduce those differences for appropriate services, saving Medicare money while removing an incentive that works against the very independent practices Congress is trying to preserve.”

​Similarly, Congress can reform Medicare Advantage and its “overcoding” problem, where contracted insurers diagnose patients as sicker than they are to increase federal reimbursement. MedPAC, the nonpartisan commission that advises Congress on Medicare policy, estimates that overcoding could cost American taxpayers $22 billion this year. Changing Medicare Advantage and instituting Medicare site-neutrality could save the required funds to make physician reimbursement reforms like the Patients First Act viable.

​“Congress should not respond to one government-created distortion by creating another. If lawmakers are going to improve Medicare physician payments, they should pair those changes with reforms that reduce unnecessary federal spending elsewhere in the program.”

​Physicians want predictable reimbursement, and patients want predictable access to care. More government involvement won’t solve that problem outright. But Congress can minimize its impact on taxpayers while trying to mitigate harm to physicians and their practices.

​You can read Charles’ op-ed in RealClearHealth.

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