by Robert Lowes
November 18, 2010 — House Democrats introduced legislation today that would postpone a 23% cut in Medicare reimbursement for physicians set for December 1 until January 1, 2012, and instead boost rates by 1% in the meantime.
Meanwhile, Sen. Max Baucus (D-MT), the chair of the Senate Finance Committee, and Sen. Chuck Grassley (R-IA), the committee’s ranking Republican member, unveiled a 2-part plan that also would spare physicians the massive pay cut for 13 months.
Under the senators’ bipartisan agreement, the Senate would delay the December 1 pay cut until January 1, and in the meantime craft another extension for the rest of 2011. The 1-month delay would be paid for with savings achieved elsewhere in the Medicare program. The financing for the longer extension has yet to be worked out.
The House was scheduled to adjourn this afternoon for the Thanksgiving holiday and return on November 29. The Senate’s timetable for adjournment this week is still up in the air. If the 2 chambers of Congress fail to pass and reconcile their respective Medicare “doc fix” plans this week, they still have November 29 and November 30 to finish up.
Brendan Daly, a spokesperson for House Speaker Nancy Pelosi (D-CA), told Medscape Medical News that the House would consider the 1-month Senate extension on November 29. The timing on the 13-month House bill has yet to be determined, Daly said.
Organized medicine has warned that if the 23% pay cut takes effect, many physicians will close their doors to new Medicare patients and even drop out of the federal program. To make matters worse, another Medicare cut of roughly 2% is scheduled for January 1.
Bipartisan Lip Service for Permanent Fix, Clash Over Financing
Organized medicine, along with the Obama administration, supports delaying the Medicare pay cut until 2012 — the so-called 13-month fix — as a way to buy Congress more time to devise a permanent solution to the Medicare reimbursement crisis. At its heart is the sustainable growth rate (SGR) formula that Congress created in 1997 to help control Medicare spending. The formula sets a target for annual Medicare expenditures on physician services based partly on growth in the gross domestic product. If actual spending in 1 year tops the target, Medicare is supposed to reduce physician reimbursement the following year to recoup the difference.
The American Medical Association and other medical societies argue that the formula is defective because physician practice expenses grow at a faster pace than the gross domestic product. They support replacing the SGR formula with one more squarely based on the Medicare Economic Index, which measures inflation in physician practice costs.
The SGR formula has triggered pay cuts every year going back to 2003, but Congress has postponed each one. However, the difference between targeted and actual spending accumulates from year to year, meaning the cuts keep getting bigger.
The notion of a permanent doc fix attracts lip service from Democrats and Republicans alike. Where the 2 parties part ways is over how to foot the bill.
The Congressional Budget Office estimates that merely freezing current Medicare rates through 2020 as opposed to decreasing them would cost taxpayers $276 billion. Giving physicians raises based on the Medicare Economic Index ups the ante to $330 billion.
In the past, Congressional Democrats have been willing to pay for such ambitious payment reforms through deficit spending. Republicans, in contrast, have insisted on cutting the budget elsewhere to finance even the smallest of doc fixes. With Republicans now in charge of the House, the debate over financing will go up several notches, especially because lawmakers will be challenged to find hundreds of billions of dollars in the federal budget that they can excise to offset a permanent fix.