House Budget Deal Continues Medicare 2% Cut, Delays SGR Repeal

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The bipartisan budget deal the House debates today would continue the 2% across-the-board sequester on Medicare payments through 2023 and pushes out the timeline for repealing the flawed sustainable growth rate (SGR) formula for calculating Medicare physician payments.

The continuation of the automatic discretionary spending cuts know as the sequester on Medicare two years beyond what was originally called for in the Balanced Budget Control Act of 2011 should save about $28 billion. But what galls Medicare providers is that this money will go toward providing sequester relief elsewhere in the budget for priorities they see as less pressing than paying for the medical care of seniors. The budget raises discretionary military spending by about $2 billion over current spending levels and raises discretionary non-military spending by about $24 billion over current spending levels.

“Frankly, for Medicare and its beneficiaries, enough is enough,” stated Chip Kahn, President of the Federation of American Hospitals trade group in remarks sent to the press. Hospitals already are facing more than $400 billion in Medicare cuts over the next decade with $95 billion in Medicare cuts imposed in just the last three years.”

The bi-partisan House budget deal worked out by Representative Paul Ryan (R-Wis) and Senator Patty Murray (D-Wash) also had an amendment added to not apply the SGR formula to Medicare physician payments until March 31, 2014. If the formula is applied as currently mandated on January 1, it would cut physician payments by an estimated more than 20%.

The inclusion of a short-term fix to the SGR problem would reset the clock for permanently repealing the formula and give lawmakers more time to figure out how to pay for it. The current proposal for an SGR repeal — H.R. 2810, the Medicare Patient Access and Quality Improvement Act of 2013 — would create modest annual increases in payments and begin to transition the payment system to one that would reward providers that meet certain as-yet-to-be-determined quality and cost-control measures.

However, although H.R. 2810 is one of the least expensive permanent SGR fixes in many years (read more here), it will still cost an estimated $116 billion to institute, according to the non-partisan Congressional Budget Office. So far, the committees that have debated the bill have not addressed where that money would come from, and Congress is set to recess for the year on Friday, making passage of H.R. 2810 before January 1 all but impossible.