The 10-month postponement of cuts to Medicare physician payment rates leaves Congress in what some see as its toughest spot to date when it comes to preventing deep pay reductions.
Lawmakers missed a major opportunity to pass a long-term solution to the broken Medicare sustainable growth rate formula. The pursuit of yet another short-term patch makes attaining a permanent fix to the SGR in 2012 significantly more difficult, with the price of a repeal going even higher above the $300 billion mark and the added pressures of competing for legislative attention in a presidential election year.
A payroll tax reduction extension package approved by Congress and signed into law on Feb. 22 by President Obama also freezes Medicare doctor pay rates for the rest of 2012. Medicare pay was set to decrease by 27.4% on March 1 after Congress had postponed the SGR cut for only two months in December 2011. But keeping rates stable only through the end of the year means that pay is scheduled to decrease by an estimated 32% in January 2013.
AMA and CMA have strongly criticized the temporary fix. Organized medicine made a concerted bid for Congress to break the cycle of payment patches by using funds projected to be saved from winding down the wars in Afghanistan and Iraq to eliminate the SGR formula, which has threatened reductions to Medicare rates since 2002. But lawmakers rejected that strategy, instead passing legislation that spends roughly $20 billion to postpone the cut and extend other Medicare pay provisions for only 10 months, while increasing the cost of a permanent solution by about $25 billion.
What it takes to buy 10 months of Medicare pay relief
As part of the most recent Medicare physician pay patch, lawmakers used cuts to hospitals, labs and other areas to offset the $17.3 billion cost of freezing doctor rates for 10 months, as well as the cost of additional Medicare pay extenders in the measure.
- $6.9 billion through reduced funding to hospitals for unpaid Medicare co-pays and deductibles.
- $5 billion through reduced funding for the prevention and public health fund created by the health system reform law.
- $4.1 billion through rebased payments for hospitals serving a disproportionate number of low-income patients.
- $2.5 billion through rescinding enhanced Medicaid pay to Louisiana under the health system reform law.
- $2.4 billion through rebased payments for Medicare clinical laboratory services.
Source: Summary of The Middle Class Tax Relief and Job Creation Act of 2012, Senate Finance Committee, February
independent public entity that is overseen by a five-member board appointed by the Governor and Legislature. The Exchange’s role in health care reform is to create a new insurance marketplace for individuals and small businesses to purchase health coverage.
States are required to select one of four benchmark plan options by September 30, 2012. Preliminary studies suggest that, while covered services across plan choices may not vary greatly, cost-sharing and other coverage limits are likely to differ significantly.
Dr. Conant is an honored and respected pioneer, lecturer, physician, and outspoken advocate for people with HIV and AIDS. Among the first physicians to identify AIDS in 1981, he helped create one of the largest private AIDS clinics, was a founder of the San Francisco AIDS Foundation, and his work contributed to development of some of today’s top HIV medications.
In an election year in which health reform is on the political front burner, what lessons can the nation learn from San Francisco’s experiment? Will preventive care save or cost more money in the long run? What are the potential long-term policy implications for patients and health care providers? What other cities might have the answers?
