American Society of Hematology

New Deficit Panel is Key to Solving Medicare Physician Payment Cuts

Published on: August 11, 2011

Physicians are scheduled to receive a 29.5 percent cut from Medicare beginning January 1, 2012 unless Congress takes legislative action to prevent it. Consequently, the new special congressional committee created in the recently approved debt deal is gaining attention as the best chance to resolve the matter.

In the legislation, known as the "Budget Control Act of 2011" (BCA), Congress created a new, bipartisan, special congressional panel tasked with finding $1.5 trillion in deficit reduction. Because recommendations from the panel may also include entitlement reforms, tax increases, or the closing of tax loopholes, it is expected that it will look at the Medicare program and propose several cost-cutting measures. Once it opens up Medicare for policy changes, it can address the long-standing problem of the sustainable growth rate (SGR) formula and physician payment.

The 12 members of the panel include: Senator Patty Murray (D-WA) as panel co-chair and Senators Max Baucus (D-MD) and John Kerry (D-MA) representing Senate Democrats; Senators Jon Kyl (R-AZ), Pat Toomey (R-PA), and Rob Portman (R-OH) representing Senate Republicans; James Clyburn (D-SC), Xavier Becerra (D-CA), and Chris Van Hollen (D-MD) representing House Democrats; and Jeb Hensarling (R-TX) to co-chair the panel and Representatives Dave Camp (R-MI) and Fred Upton (R-MI) to represent House Repbulicans.

The panel is required to report its recommendations to the Congress by a majority vote no later than November 23, 2011. Congress is required to vote on the recommendations by December 23, 2011. If the panel finds at least $1.5 trillion in savings and its recommendations are enacted by Congress, the debt ceiling will be raised by $1.5 trillion. If the panel fails to produce a bill, its bill is not enacted, or it produces less than $1.2 trillion in savings, the debt limit will increase by $1.2 trillion and across-the-board cuts known as "sequestration" will be triggered to achieve $1.2 trillion in savings.

Physicians’ best hope, experts say, is to try to lobby the joint committee to come up with some solution that would provide more payment certainty and prevent multiple cuts. But the cost of changing the flawed reimbursement formula is high — estimated at about $300 billion for 10 years — and is expected to grow with time. In addition, the cost of changing the formula will need to be offset with other savings, which most likely will come from other health care sectors as it has in the recent past. Debates over those offsets held up several of the five patches postponing the cuts that Congress passed in 2010.

Physician groups have already begun to lobby hard for the special committee to address the reimbursement rate issue in hopes that a solution will be found — even though it likely means getting some amount of cuts because the ongoing uncertainty over reimbursement rates cannot be tolerated by practices and may lead physicians to limit the number of Medicare patients they accept, or to stop seeing them altogether.

Lawmakers in the House of Representatives have been looking into ways to replace the troubled system for months, with the goal of holding votes on legislation this fall. Two House committees — Energy and Commerce, and Ways and Means — held hearings on the issue this year, where provider groups suggested a five-year period of stable reimbursement rates to work on finding on a permanent formula replacement.

The creation of the new special committee provides one more opportunity to address the issue. This means physicians will have to get their message across to both that a long-term, permanent fix of the SGR is needed.

ASH continues to advocate that physicians cannot tolerate a nearly 30 percent cut and to work with Congress on finding a solution. Please visit the ASH Advocacy Center to join ASH's campaign and prevent physician payment cuts. The Society will keep members apprised of all developments.

back to top