GOP Bill Calls for 2-Year Medicare 'Doc Fix' With 1% Raise

December 09, 2011

December 9, 2011 — House Republicans today unveiled a "doc fix" for the Medicare reimbursement crisis that would not only avert a 27.4% pay cut on January 1 but also raise rates by 1% annually through 2013.

The measure is part of an omnibus bill that would, among other things, extend unemployment benefits as well as a temporary cut in the Social Security payroll tax through 2012. House Republicans, who command a majority in that chamber, intend to vote on the bill next week. If passed, the bill faces Democratic opposition in the Senate, which that party controls, and a threatened veto from President Barack Obama.

Earlier this week, House Republicans were considering a doc fix that would merely freeze Medicare rates over 2 years. The Congressional Budget Office (CBO) had put its cost at $38.6 billion over 10 years.

The latest doc fix from the GOP is more generous, with a 1% raise in both 2012 and 2013. The CBO priced that at $38.9 billion.

The bill requires the Medicare Payment Advisory Commission, the Governmental Accountability Office, and the Department of Health and Human Services to help Congress devise a new way to set Medicare rates for physicians. The method used now — the sustainable growth rate (SGR) formula — is what triggered the 27.4% cut scheduled for 2012.

Organized medicine as well as the GOP Doctors Caucus, which consists of 21 physicians and other clinicians in the House, has lobbied hard for a permanent repeal of the SGR formula. Its cost — almost $300 billion for merely freezing rates through 2021 — appears too expensive for a budget-minded Congress to stomach right now, especially because fiscal conservatives insist that every increase in spending be offset elsewhere in the federal budget.

Rep. Phil Gingrey, MD (R-GA), co-chair of the GOP Doctors Caucus, told Medscape Medical News that he does not expect "physicians to be jumping up and down and claiming victory" over the 2-year doc fix with its modest raise. However, the temporary solution will keep most physicians from abandoning Medicare and give policymakers more time to replace the SGR formula with one that rewards clinicians for the quality of their care, according to Dr. Gingrey.

"We're committed [to repealing the SGR]," he said. "We're trying to turn the Titanic. It's a very slow, wide turn, but we're going to get there."

What Does Crude Oil Have to Do With Medicare?

Congressional Republicans and Democrats alike pay lip service to avoiding a massive reduction in Medicare pay that would drive physicians out of the program. The challenge is getting these political lips to agree on how to finance the solution.

The omnibus bill released today, titled the Middle Class Tax Relief and Job Creation Act of 2011, contains a wide range of "pay-for's" to offset its cost. The bigger pay-for's include $36 billion from changing the co-pay structure for civilian federal retirees, $31 billion from gradually raising Medicare premiums for high-income beneficiaries, and $26 billion from extending the current pay freeze for federal employees through fiscal 2013.

A summary of the bill issued by House Republicans lists several 'offsets designed specifically to pay for the $38.9 billion doc fix. Two fall under the category of what the GOP calls defunding the Affordable Care Act (ACA). The bill would trim $8 billion from the $18 billion allotted to the new Prevention and Public Health Fund. It would raise another $13.4 billion by recouping more money from individuals who receive more in federal tax credits for insurance premiums than they qualify for.

Other offsets take their toll in the hospital industry, which has lobbied Congress not to fund a doc fix at its expense. The bill calls for reducing the Medicare facility fee that hospitals receive for outpatient evaluation and management services, reimbursement for bad debt caused by Medicare patients who do not pay their share of the bill, and special allotments to hospitals with a disproportionate share of low-income patients.

Dr. Gingrey acknowledged that hospitals have a "legitimate gripe" about reduced federal outlays.

"There will be some angst and heartburn," he said, noting that as a congressman, he represents hospitals as well as physicians in his district. "It's hard on each and every occasion to please everyone." However, Dr. Gingrey suggested that fairness played into the decision to reduce bad-debt payments to hospitals. "Physicians have never gotten that," he said. "[Bad debt] is a total loss to them."

Congressional Democrats also cite fairness in their opposition to the GOP bill, saying that it does not exact enough financial sacrifices from the ultra-wealthy. Senate Democrats this month have tried to fund an extension of the payroll tax cut with a new surtax on millionaires, only to get road-blocked by their Republicans.

Today the White House made the same fairness argument as it went on record opposing the Republican legislation. White House spokesperson Jay Carney also criticized the bill for requiring speedy consideration of the proposed Keystone XL pipeline, which would carry Canadian oil to Texas and create thousands of US jobs. The Obama administration has put off the decision until 2013 so it has more time to weigh environmental factors and consider an alternate route. On Wednesday, Obama said he would reject any bill marrying the pipeline issue to the extension of the payroll tax cut.

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