To Bring Doctors Back to Medicare, Fix The “Doc Fix”

Dr. John Slatosky, a primary care physician in rural North Carolina, says, “I just couldn’t see myself as anything but a country doctor.”

But Medicare is making it harder for him to stay true to his calling.

Like nearly a fifth of all physicians, Dr. Slatosky is no longer taking new Medicare patients. The most recent National Ambulatory Medical Care Survey found 17 percent of physicians no longer do.1

A key culprit? Medicare’s Sustainable Growth Rate (SGR) formula, one of the worst features of Medicare, and one Congress should have eliminated long ago.

The SGR is designed to cut physician fees paid by Medicare automatically whenever those fees exceed an expenditure target set by federal law.

It’s intended to be a cost-saving measure, but more than a decade worth of evidence proves it doesn’t work.

Medicare payments first exceeded the SGR target in 2001, resulting in a March 2002 5.4 percent cut in reimbursement payments to physicians. But doctors’ groups protested. They’d done the work, so why shouldn’t they be paid?

Mindful that doctors vote, Congress caved. But instead of repealing the unworkable SGR altogether, Congress kicked the proverbial can down the road. It temporarily suspended a subsequent 2003 SGR cut while approving a 1.6 percent increase in physician fees.

This process has become known as the “Doc Fix.” Every year or two the temporary suspension of the SGR cut runs out. Congress then imposes another temporary suspension along with a 1 to 2 percent increase in fees.

Successive applications of the Doc Fix have dramatically widened the gap between the SGR expenditure target and what Medicare actually spends. If the Doc Fix is ever abandoned, the cuts will be huge.

This isn’t a hypothetical: If Congress does not apply yet another Doc Fix soon, suspending the SGR cut scheduled for January, physician reimbursements under Medicare could be cut by as much as 25 percent.

Dr. Slatosky foresaw trouble long ago: “It was in 2007, when the [SGR] cut was going to be about 10 percent. Then, Congress came in at the last second and stopped it. But the news stories noted that Congress would have to come in and suspend it again in six months. I pretty much saw the writing on the wall that this was going to be a perpetual mess. You knew Congress was not going to fix it permanently.”

Uncertainty caused by the SGR is a major factor in causing more physicians to limit their exposure to Medicare. A 2010 American Medical Association survey found that over three-quarters of the physicians who limit the Medicare patients they see cited the “ongoing threat of future payment cut makes Medicare an unreliable payer” as a reason.2

The SGR, along with low reimbursement rates and costly paperwork, is why physicians are increasingly turning away Medicare patients. In 2001, about 10 percent of physicians were no longer seeing new Medicare patients.3 Now it’s 17 percent.

Always worried the government might suddenly and dramatically cut the amount it paid him to treat Medicare patients, Dr. Slatosky decided he simply couldn’t expand the number of Medicare patients in his practice. It’s a decision that concerns him.

“It bothered me a lot because now there were going to be Medicare patients who would have the hassle of trying to find another physician in this rural area,” lamented Dr. Slatosky. “But, in the end, it was better to have a physician here seeing some of the Medicare patients in the area than me losing my business and having no physician here at all.”

It’s a sad state of affairs when doctors are forced to risk the financial health of their practices just to take on new Medicare patients.

If Congress resumes its regular Doc Fix kabuki dance again in 2015, it will assure that seeing Medicare patients remains a risky bet for many doctors.

For the sake of Medicare patients, the time is now to repeal the SGR altogether. Over 81 million people are expected to be enrolled in Medicare by 2030 — 50 percent more than are currently enrolled. Yet Congress continues to drag its feet, keeping the SGR rule in place and making it increasingly likely Medicare patients will have difficulty finding a doctor in the future.

For the sake of patients, Medicare must be reformed so that it helps rather than hinders physicians’ financial stability.

Ending the SGR is a good first step.

David Hogberg, Ph. D., is senior fellow for health care policy at the National Center for Public Policy Research.


1 Sandra L. Decker, “In 2011 Nearly One-Third Of Physicians Said They Would Not Accept new Medicaid Patients, But Rising Fees May Help,” Health Affairs, August 2012, Vol.31, No. 8.

2 “The Impact of Medicare Physician Payment on Seniors’ Access to Care,” American Medical Association, AMA Online Survey of Physicians, May 2010.

3 Donald K. Cherry, Catharine W. Burt, and David A. Woodwell, “National Ambulatory Medical Care Survey: 2001 Summary,” Centers For Disease Control, Advanced Data From Vital and Health Statistics, No. 337, August 11, 2003.

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