Debt Deal Leaves Door Open for More Physician Pay Cuts
By Mary Ellen Schneider
Elsevier Global Medical News
Legislation to raise the debt ceiling and cut the deficit, signed by the president earlier this month, leaves physicians in limbo regarding their Medicare payments next year and in the future.
The biggest question is whether the 29.5 percent cut to Medicare physician fees scheduled for Jan. 1, 2012, will go into effect. This massive payment cut is called for under the Sustainable Growth Rate (SGR) formula, the formula used to set Medicare payments to physicians.
In a June 27 letter to the President, Vice President, and key congressional leaders involved in deficit reduction negotiations earlier this year, a coalition of 113 physicians’ groups, including the American College of Surgeons and the American Medical Association, called on Congress to include a permanent fix to the SGR in the deficit reduction package. In the letter, the physician organizations stressed the urgency of finding a solution now in pointing out that while fixing the SGR presently carries a $300 billion price tag, the cost of securing a solution only will become more complicated with time as “the cost of [a permanent SGR repeal] will exceed $500 billion in a few short years.”
The physician community letter was not the first time this year that the American College of Surgeons and other physician organizations have asked Congress to repeal the SGR and move toward a new payment system. At a May 5 hearing before the House Energy and Commerce Committee’s Subcommittee on Health, David B. Hoyt, MD, FACS, the Executive Director of the American College of Surgeons, and other physician leaders testified at regarding the importance of addressing the SGR now. In his testimony, Dr. Hoyt offered ideas about how to transition away from the SGR, stating that “[t]o move beyond the SGR, repeal must be followed by a period of stability in which bundled payments and other models can be tested and implemented, all the while keeping the focus on quality to improve value and lower cost.” In placing a particular emphasis on the documented success of the College’s numerous efforts in surgical quality improvement, Dr. Hoyt said, “We can improve quality, prevent complications and reduce costs. That’s good for providers and payers, government officials and taxpayers. Most of all, that’s good for patients.” Unfortunately, in spite of these efforts, lawmakers left measures to address the SGR out of the deficit reduction package completely.
The new law of the land, the Budget Control Act of 2011, puts into place about $1 trillion in spending cuts over the next decade from the discretionary side of the federal budget. While these immediate cuts do not directly affect physicians, they do impact graduate medical education: Medical students who take out subsidized graduate student loans on or after July 1, 2012, will have to start paying the interest on those loans earlier.
The next round of budget cuts will be determined by the Joint Select Committee on Deficit Reduction, also known as the super committee. The 12-member panel is composed of legislators from both parties and both houses of Congress.
The joint select committee will be co-chaired by Sen. Patty Murray (D.-Wash.), who serves on the Senate Budget Committee, the Senate Health, Education, Labor & Pension (HELP) Committee, and the Senate Appropriations Committee, and Rep. Jeb Hensarling (R.-Tex.), chairman of the House Republican Conference and a member of the House Financial Services Committee.
The other members include Sen. Max Baucus (D.-Mont.), chairman of the Senate Finance Committee and an architect of the Affordable Care Act; Sen. John Kerry (D.-Mass.), the 2004 Democratic presidential nominee and a member of the Senate Finance Committee; Sen. Jon Kyl (R.-Ariz.), the Assistant Republican Leader and a member of the Senate Finance Committee; Sen. Pat Toomey (R.-Pa.), a member of the Senate Budget Committee; Sen. Rob Portman (R.-Ohio), also a Budget Committee member and a former director of the Office of Management and Budget; Rep. Dave Camp (R.-Mich.), chairman of the House Ways and Means Committee; Rep. Fred Upton (R.-Mich.), chairman of the House Energy and Commerce Committee; Rep. James E. Clyburn (D.-S.C.), the House Assistant Democratic Leader and the third-ranking member of the House Democratic leadership; Rep. Xavier Becerra (D.-Calif.), vice-chairman of the House Democratic Caucus and a member of the House Ways and Means Committee; and Rep. Chris Van Hollen (D.-Md.), the ranking member of the House Budget Committee. The appointments were made by party leaders in the House and Senate.
Before the joint select committee can forward its recommendations to the full Congress, those recommendations must be approved by a majority vote. Policy experts have expressed concerns about whether the committee will be able to develop consensus around a particular deficit reduction plan.
The law sets a goal for the joint select committee to draft legislation cutting another $1.2 trillion to $1.5 trillion in federal spending over the next 10 years. The committee has broad authority to consider spending cuts, taxes, and other changes across both discretionary and mandatory government programs, including Medicare, Medicaid, and programs created under the Affordable Care Act last year. It is possible that these recommendations could include reductions in physician and other payments under Medicare and other federal health programs. In addition, even if Congress were to agree on a measure to prevent the pending 29.5 percent cut in Medicare payments in January, physicians and other providers could still face some form of Medicare payment cuts next year.
The joint select committee must vote on recommendations by Nov. 23, and lawmakers in both houses of Congress must vote on the joint select committee’s bill by Dec. 23.
To expedite consideration of the deficit reduction package, the Budget Control Act requires that the joint select committee’s bill be given a fast-track, up-or-down vote requiring a simple majority to pass each chamber. Therefore, procedural considerations in the Senate or House will not be able to be used to prevent a vote on the package.
Should the joint select committee’s bill fail to agree on a package, or should the committee’s proposal fail to pass Congress, the Budget Control Act calls for automatic cuts across the federal government totaling $1.2 trillion over 10 years.
Those cuts would include up to a 2 percent reduction in Medicare physician payments beginning in 2013. Under such a scenario, physicians could face not only the 29.5 percent SGR cut in January 2012, but another 2 percent annual fee cut starting the following year.
Online August 18, 2011