Democrats push three-year Medicare 'doc fix' as part of larger tax bill

May 21 2010

A proposal to stop planned payment cuts to Medicare doctors for three years is in a bill extending tax cuts and lengthening unemployment benefits.

Politico reports that without such a plan, doctors who treat Medicare patients face a 21 percent reduction in payments on June 1, "and the issue has become a political football of sorts, particularly during the health care reform debate when Democrats decided not to repair the formula, which would have made their plan more expensive." The American Medical Association and other groups wanted a permanent repeal of the formula that schedules the cuts — called the Sustainable Growth Rate — but didn't get their wish. "The proposal released Thursday as part of a broad jobs and tax bill would increase payments to doctors by almost $60 billion over three years to offset the planned cut."

"[P]hysicians would get a 1.3 percent raise this year and an additional 1 percent raise in 2011. In 2012 and 2013, primary care and preventive services doctors would get" a higher raise than other physicians. "It's the first time payments have been split up by practice. The move is designed to encourage doctors to go into primary and preventive care services (Haberkorn, 5/20).

Roll Call "In a statement released Thursday, AMA President J. James Rohack said his organization is 'deeply disappointed' in the compromise. But he added, 'Achieving full repeal of the payment formula is not feasible at this time. Lawmakers must realize that the underlying policy problem will return larger than ever in 2014,' Rohack said. 'The pending Medicare proposal treats the symptoms — it's not a cure for the disease'" (Roth, 5/20).

The Hill: "Other groups have adopted a more conciliatory approach from the start, scoring points with powerful Democrats in the process. 'The payment proposal ... recognizes the importance of allowing for growth in the services provided by primary care physicians, especially if we are to respond to the increased demand for these services as more Americans get covered by insurance,' Ted Epperly, chairman of the American Academy of Family Physicians, said in a statement." The American College of Physicians and the American College of Cardiology also supported the idea (Pecquet, 5/20).

Modern Healthcare: The proposal would lower reimbursement to hospitals. "Under the package, a Medicare policy known as the '72-hour rule' would get refigured, amounting to about a $4.5 billion hit to the hospital sector. The provision expands the list of services that are not eligible for reimbursement under the Medicare rule. Essentially, it bars the unbundling of payments for therapeutic services unrelated to a hospital admission if they are performed within 72 hours of an admission."

The bill gives physicians, however, a 1.3 percent increase starting June 1 for the remainder of the year. "In 2011, doctors will get a 1% update. From 2012 through 2013, however ... updates would depend on physicians meeting certain spending targets, according to a summary of the bill. But the formula backtracks to current law in 2014, setting physicians up with a possible 27% cut, according to one healthcare lobbyist" (DoBias, 5/20).

Baltimore Business Journal: "The Medicare Sustainable Growth Rate was designed to help the federal government decide how much it could increase or shrink reimbursements for doctors who care for individuals 65 and older. But now it threatens to drive some physicians out of practice, into early retirement or to jobs at hospitals that offer higher pay and less interaction with Medicare. … And instead of cutting doctors' pay each year since then to help trim deficit spending, federal lawmakers simply deferred those cuts year after year to the point where, if they called in the tab today, it would cost physicians about $276 billion, according to the Congressional Budget Office." The outcome can even affect doctors who don't see Medicare patients, the Baltimore Business Journal reports, because insurers "stick close to" Medicare's rates (Graham, 5/21).

CongressDaily: Meanwhile, "a handful of largely noncontroversial extensions of Medicare and Medicaid programs were not included in Thursday's proposed 'extenders' package, even though a large portion of the legislation focuses on health care. … The missing 'fixes' are some of the usual tweaks that come with running a major government health program like Medicare and Medicaid ... One item that will expire at the end of the year sets a floor for a factor used to calculate Medicare physician fees in rural areas."

"Other fixes that were not in the extenders package but are set to expire at the end of 2010 include Medicare therapy caps, which provide allowances for qualified seniors to receive occupational and speech therapy, and additional Medicare funding for certain mental health treatments and ambulance services" (McCarthy, 5/21).