Proposal Nixes Medicaid Raise to Fund Doc Fix

December 05, 2012

Organized medicine is protesting a nascent Congressional proposal to eliminate a Medicaid raise for primary care physicians that would either fund a 1-year postponement of a 26.5% Medicare pay cut set for January 1 or reduce the federal deficit in general.

The American Medical Association and 260 other national and state medical societies registered their "strong opposition" to the idea in a letter today to Republican and Democratic leaders in both the House and Senate. Many of the societies were state chapters of national groups such as the American Academy of Pediatrics, the American College of Physicians (ACP), and the American Academy of Family Physicians (AAFP).

"Elimination of this (pay raise) further burdens the already challenged Medicaid system of today," the medical societies stated. "Many physicians do not participate in the Medicaid program due to poor payment rates that, historically, are well below the actual costs of providing care. This results in reduced access to care for the most vulnerable patients, and higher costs to federal and state governments."

In 2013 and 2014, the Affordable Care Act (ACA) raises Medicaid rates to Medicare levels for evaluation and management (E/M) services and vaccine administration. Family physicians, general internists, pediatricians, and subspecialists related to these fields (eg, pediatric cardiologists) are eligible for the increase. Congress wrote the raise into the ACA to entice more physicians to accept Medicaid patients, who will grow dramatically in number as a result of the law.

The fate of the Medicaid raise is part of the high-stakes drama known as the "fiscal cliff" that is engulfing Washington, DC. The perils of this cliff consist of automatic spending cuts and the expiration of tax cuts, most notably those from the Bush presidency, that all take effect in January unless lawmakers can devise a less draconian solution to the federal budget deficit. The nonpartisan Congressional Budget Office warns that if the country goes over the cliff, it could land in another recession.

There Must Be "Pay-For's" in a Deficit-Phobic Congress

One of the fiscal-cliff spending cuts scheduled for January 1 is the 26.5% pay cut in Medicare pay for physicians, triggered by the program's sustainable growth rate (SGR) formula for setting rates. Organized medicine wants Congress to replace the SGR formula with something more equitable for physicians. However, lawmakers fixated on bigger elements of the fiscal cliff have been more inclined to postpone the pay cut for 1 year — and freeze rates at their current level — as they have done in the face of previous SGR-mandated reductions. The cost of such a 1-year "doc fix," as it's called, has been put at $25 billion.

These days, a deficit-phobic Congress generally does not increase spending in one part of the budget without trimming an equivalent amount somewhere else, or raising an equivalent amount of revenue. Lawmakers sometimes refer to these offsets as "pay-for's."

House Republicans have discussed canceling the Medicaid raise as one way to offset a 1-year doc fix, according to officials at several medical societies. The Medicaid raise would cover $15 billion of the $25 billion cost. Other pay-for's under consideration include reducing rates for E/M services provided in hospital outpatient departments. The American Hospital Association issued a press release yesterday objecting to making hospitals suffer financially to protect Medicare reimbursement for physicians.

Today's letter from organized medicine to Congressional leaders about preserving the Medicaid raise does not mention any proposal for a Medicare doc fix, much less the fiscal-cliff negotiations. However, the AAFP, which signed the letter, stated in a press release today that the Medicaid raise is being eyed specifically as a doc-fix offset, a point reiterated by Ray Quintero, director of government relations for the American Osteopathic Association, another signatory to the letter.

Quintero told Medscape Medical News that House Republicans might have seized on the Medicaid raise as an pay-for because "the funding hasn't gone out to physicians yet."

"It's easier to retract," he said.

The loss of the Medicaid raise, said Quintero, would have a "devastating impact" on primary care physicians who are already leery of accepting Medicaid patients because of low payment rates.

Quintero said he has not seen anything in writing about the House GOP proposal to sacrifice the Medicaid raise. However, "it's an open secret," said Robert Doherty, senior vice president for governmental affairs and public policy for the ACP, which also signed today's letter.

"There's very little on paper, but we talk to people on (Capitol) Hill," Doherty told Medscape Medical News. "This is getting serious consideration."