Why Medicare Trustees turned from convention in this year's spending forecast
An age-old convention of federal government budgeting, forecasting and analysis of policy is to use current law as the foundation for a baseline scenario. Adhering to this principle allows all parties to consider policy issues on the basis of solid ground, what's on the books right now, rather than making assumptions about legislative changes, which may or may not occur.
Indeed, the 113th Congress, which has been described as "historically good at not passing bills," this year has only been able to pass 15 bills that have been signed into law by the President.
Thus, it was surprising that the 2014 Medicare Trustees Report, which was issued on July 28, 2014, used a "projected baseline," rather than a current-law baseline for the first time ever. The projected baseline assumes that Congress will continue overriding the sustainable growth rate, the formula that Congress uses on an annual basis to adjust what Medicare pays physicians. In fact, the projected baseline assumes that Congress will override the SGR for 10 consecutive years in the future, replacing SGR-generated cuts with 0.6 percent annual raises throughout the 10-year period. The 0.6 percent yearly adjustment was based on the average of past short-term "doc fixes."
Why did the Medicare Trustees depart from the current-law convention? They wrote, "Because the physician payment reduction required by current law has been overridden for 12 consecutive years, the Trustees decided for the 2014 report to emphasize projections that reflect the current practice of modest payment increases in the physician fee schedule." In other words, the Medicare Trustees think that the painful annual drama — with SGR-driven cuts to the Medicare Physician Fee Schedule hanging like the mythical Sword of Damocles over physicians with Congress scrambling to pull together a short-term patch — will go on and on, for at least 10 years, as the most likely scenario for the future.
While the Medicare Trustees Report talks about the SGR being "permanently overridden by lawmakers" under the projected scenario, it's important to understand that a series of 10 annual overrides of the SGR does not constitute a permanent fix to or replacement of the SGR. Several legislative bills, such as H.R. 4015, the SGR Repeal and Medicare Provider Payment Modernization Act of 2014, have proposed true permanent fixes to the SGR that include new formulas for annual adjustments to the Medicare Physician Fee Schedule.