House GOP Drafts Fix for Looming Medicare Physician Cuts

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House Republicans announced a broad-reaching bill on Friday that includes a "fix" for the mandated 27.4 percent Medicare physician reimbursement cut that will go into effect on Jan. 1, 2012, unless Congress takes action .

The bill is called the Middle Class Tax Relief and Job Creation Act of 2011 and among many other provisions, it proposes a 1 percent increase in physician fee-for-service payments in 2012 and 2013, representing the most certainty physicians have had since 2004, according to a GOP summary of the bill.

The Congressional Budget Office estimates the bill will increase spending by $25.3 billion over 10 years. To help win favor among Democrats, House Republicans propose extending the payroll tax cuts by another year, something Senate Republicans currently oppose in an ongoing debate in that chamber.

In order to pay for it, the House “doc-fix” expects to recover $36 billion over 10 years by changing the co-pay structure for civilian federal retirees, $31 billion from gradually raising Medicare premiums on high-income beneficiaries and $8 billion by reducing the prevention and public health fund created under the Affordable Care Act.

Republicans are also targeting hospitals by reducing the facility fee for outpatient services ($6.8 billion), reimbursement for bad debt under Medicare ($10.6 billion) and special payments to hospitals that serve more low-income patients ($4.1 billion). In addition, they want to increase the amount of health insurance subsidies that can be recovered from fraud under the federal health reform law, accounting for $13.4 billion over 10 years.

President Obama has said he would veto the bill in its current form mainly because it puts too much of the burden to pay for the plan on middle class Americans rather than the wealthy.

The Medicare Sustainable Growth Rate (SGR) formula puts physician reimbursements on the chopping block every year only for Congress to typically pass a one-year fix. Many physician groups as well as the Obama administration would like to see the SGR formula replaced, which could come with a price tag that’s tough to swallow for this budget-conscious Congress.

Simply freezing physician payments under Medicare over the next 10 years would cost an estimated $300 billion. Reducing specialist pay in conjunction by 5.9 percent, as the Medicare Payment Advisory Committee suggests, would cost $200 billion over 10 years.

One likely hang-up for the current “doc-fix” is that GOP Republicans inserted a provision to accelerate granting the Keystone XL natural gas pipeline that’s been extremely controversial in recent weeks.

To read the complete bill click here.

For a timeline of the “doc-fix” saga by the Washington Post click here.