House Okays Medicare 'Doc Fix' That Appears Doomed in Senate

Disclosures

December 13, 2011

December 13, 2011 — Setting up physicians for another likely disappointment, the House today passed a bill that would avert a 27.4% reduction in Medicare reimbursement scheduled for January 1.

The disappointment will probably come compliments of the Senate, where Democrats have vowed to block the legislation. Their ire is aimed not at the latest "doc fix" to the Medicare reimbursement crisis but, rather, at other provisions regarding a payroll tax cut and the controversial Keystone XL oil pipeline.

Approved in a 234-193 vote, the House bill would extend a temporary cut to the Social Security payroll tax paid by workers for 1 more year, keeping it at 4.2%. Without this renewal, the tax will return to its former level of 6.2% on January 1. House Republicans propose paying for the extension by, among other things, increasing Medicare premiums for high-income beneficiaries and freezing compensation for federal workers through fiscal 2013. Senate Democrats, however, want to offset the cost by imposing a surtax on millionaires, a move already kiboshed by their Republican opponents.

Another contested provision in the House bill would require the Obama administration to reach a decision within the next 60 days on a permit for the proposed Keystone XL pipeline, which would carry Canadian crude to Texas. Republicans contend that the pipeline will not only improve the country's energy security but also create thousands of jobs.

The Obama administration had put off the permit decision off until 2013, ostensibly to gain more time to study the project's environmental ramifications. Pundits also think the White House would rather make the decision, which pits jobs against environmental safety, until after the 2012 presidential election. Senate Democrats want the pipeline divorced from the payroll cut extension, and Obama has threatened to veto any bill that combined the 2 items.

Latest Doc Fix Would Lead to 37% Cut in 2014

Seemingly lost in the gunpowder clouds of partisan politics, once again, is the latest doc fix to the Medicare reimbursement crisis. The House bill passed today would essentially postpone a pay cut for 2 years and, instead, give physicians a 1% raise in both 2012 and 2013.

The bill requires Congress, in the meantime, to work with the Medicare Payment Advisory Commission, the Governmental Accountability Office, and the Department of Health and Human Services to replace Medicare's current method for setting physician reimbursement, called the sustainable growth rate (SGR) formula. This formula, approved by Congress in 1997, is responsible for triggering the massive pay cut set for 2012.

Policymakers will feel mounting pressure to devise a replacement: In 2014, the SGR formula will call for an estimated 37% cut in physician pay, according to the Congressional Budget Office.

Organized medicine got its hopes up for a permanent doc fix during the recent deliberations of the bipartisan Select Committee on Deficit Reduction, charged with recommending at least $1.2 trillion in deficit reduction moves. The so-called super committee enjoyed super powers when it came to finding money in the federal budget to finance a permanent doc fix, which would cost at least $300 billion, and its recommended legislation could not be amended or filibustered in the Senate. However, the gridlocked committee announced on November 21 that it would not be able to meet its November 23 deadline.

In a recent interview with Medscape Medical News, Rep. Phil Roe, MD (R-TN), said the super committee represented "a phenomenal opportunity" to permanently repeal the SGR formula. "It's a shame it didn't happen," said Dr. Roe, vice chair of the GOP Doctors Caucus in the House.

Physicians may have to scale back their hopes even more. The publication InsideHealthPolicy.com is reporting that there is bipartisan support in the Senate for a 1-year doc fix that would freeze Medicare rates, as opposed to giving physicians a raise. That solution may not get enacted until early January, InsideHealthPolicy.com reports. In such a scenario, the Centers for Medicare and Medicaid Services probably would instruct its contractors to put claims processing on hold in January until the doc fix is passed, rather than pay claims at the drastically reduced rate that kicks in on New Year's Day.

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