American Society of Hematology

Super Committee Failure Leaves 27 Percent Medicare Payment Cut in Place; Automatic Cuts For Most Federal Programs To Begin in 2013

Published on: November 22, 2011

Hours before its statutory deadline, the joint congressional committee assigned to recommend $1.2 trillion in deficit reduction announced Monday that a bipartisan agreement was beyond its reach.

Deep partisan division over the mix of entitlement cuts and tax hikes prevented the Joint Select Committee on Deficit Reduction (commonly referred to as the "Super Committee") from reaching any agreement on a deficit-reduction package. Ultimately, Republicans and Democrats on the 12-member panel selected by House and Senate leaders could not agree on how large a role increased revenue should play in deficit reduction. Republicans were willing to go only so far in putting tax increases on the table. Democrats demanded more if they were to agree to spending cuts, saying affluent Americans could and should pay a "fair share."

Congressional Action Expected to Avert Medicare Provider Cuts

With the Super Committee failing to reach agreement on a deficit-reduction proposal, Congress missed an opportunity to permanently repeal the sustainable growth rate (SGR) formula. As a result, physicians still face a 27 percent cut in Medicare physician payments scheduled to take effect January 1.

However, Democratic and Republican leaders in Congress have publicly stated their commitment to take action this year to avert the 27 percent cut. Options for SGR relief outside of the Super Committee process have ranged from short-term patches of a year or two to longer-term relief that provides for transition to a new Medicare physician payment system. The scope of the next SGR intervention will not come into better focus until Congress returns from its Thanksgiving break.

Now is the time to contact lawmakers and urge them to address and correct the physician payment formula. Please visit the ASH Advocacy Center to join ASH's campaign.

Sequestration Cuts

The failure of the panel's nearly three-month effort to find a compromise on taxes and entitlement programs also leaves a range of federal programs including Medicare and the National Institutes of Health (NIH) facing automatic spending cuts through a process known as sequestration.

Current law stipulates that across the board cuts totaling $1.2 trillion will be imposed in 2013 if the Super Committee fails to achieve this targeted amount. This spending reduction is to be equally divided between defense and non-defense programs, including NIH. Medicare cuts are limited to a 2 percent reduction in provider payments. This sequestration cut would be separate or on top of any potential SGR reduction.

Given the severe cuts that sequestration would impose on defense and other programs, there has been extensive discussion by members of Congress regarding passage of new legislation to prevent sequestration from being implemented in 2013. Although most expressions of concern have focused on the $600 billion in defense cuts that will be triggered in a sequester, some lawmakers also suggested that the corresponding $600 billion in cuts to domestic programs and some mandatory spending will also be contested before the automatic reductions begin in January 2013. However, Senate Majority Leader Harry Reid (D-NV) has indicated that in the absence of a "balanced plan" to reduce the deficit, he "will oppose any efforts to change or roll back the sequester," and President Obama has promised to veto any attempt to "get rid of" the sequester.

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