American Society of Hematology

Agreement Reached to Avert Cuts in Medicare Physician Payment for Remainder of 2012

Published on: February 16, 2012

Congressional negotiators have reached agreement on extending the payroll tax holiday, unemployment insurance benefits, and current Medicare physician payment rates for the next 10 months, through the end of 2012. The compromise was completed early in the morning of February 16, with votes in the House and Senate expected prior to President's Day weekend. In lieu of the 27.4 percent physician payment cut scheduled to take effect on March 1, a payment freeze will be effective through the end of the year.

Although congressional leaders had agreed upon the need to avert the potential cuts in Medicare payment rates to physicians, the stumbling block had been largely over how to pay for it and the payroll tax and unemployment provisions of the package. The cost of this short-term patch will be offset through reductions in a number of health care programs, including Medicaid disproportionate share payments to hospitals, Medicare bad debt payments to hospitals, federal Medicaid disaster payments to Louisiana, and the prevention fund created by the Affordable Care Act. Other expiring Medicare policies are also extended through the end of the year as part of the deal, including the "floor" on geographic adjustments to the physician work component of the Medicare fee schedule, the therapy cap exemption process, and ambulance add-on payments. Two policies—Section 508 hospital and special pathology payments—will be phased out, and mental health add-on payments and pay increases for bone density scans have been eliminated.

The House and Senate are each expected to vote on the package prior to the Presidents Day congressional recess scheduled for next week, allowing the measure to be signed into law by President Obama prior to the expiration of the current short-term fix that expires on February 29.

While Medicare reimbursement rates for physicians would be maintained at current rates for the remainder of the year, the agreement falls short of the multi-year fix or permanent repeal of the sustainable growth rate (SGR) formula currently used to calculate annual payment rates. This means physicians will face another significant cut in payment rates for 2013 unless Congress again intervenes – an issue that will likely not be dealt with until after the November elections during a "lame duck" session of Congress.

ASH thanks all of its members who joined the Society's advocacy campaigns. ASH will continue to work with the Congress to find a permanent solution to the physician payment issue and prevent future disruption by stop-gap measures to correct the sustainable growth rate (SGR) formula.

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