Washington Watch: Permanent Doc Pay Fix Will Come, But When?
Washington Watch: Permanent Doc Pay Fix Will Come, But When?
On February 2, 2012, President Obama signed payroll tax legislation that included a provision canceling the Medicare physician pay cut of 27 percent through the end of the year and replacing it with a pay freeze. A growing consensus exists in Washington that a permanent fix will feature several years of legislative payment updates, followed by a transition to a new payment system; however, it remains unclear when Congress will approve a permanent fix.
If Congress wants to avert a 32 percent Medicare reimbursement cut for physicians that would take effect January 1, 2013, it will have to address the issue during a lame-duck session after the upcoming presidential and congressional elections. Because the session could be politically contentious and include several other important issues to address, it is unlikely Congress would tackle a permanent fix then. More likely to occur after the presidential election is that Congress would again pass a short-term fix canceling the January 1 pay cut. That would allow a permanent fix to be included in a larger legislative package of tax and entitlement reform that could be considered by a new Congress.
According to some policy experts, there is growing certainty that a permanent fix would entail Congress passing yearly payment updates until the Centers for Medicare and Medicaid Services can test and implement an alternative payment system. Legislation eventually passed by Congress most likely will include a phase-in period. For example, in May 2011, the American Medical Association told the House Energy and Commerce Health Subcommittee that the current system should be repealed, followed by a five-year period of legislative updates and then "a transition to an array of new payment models designed to enhance care coordination, quality, appropriateness and costs."
During the past year, Congress had two opportunities to advance a permanent fix. In the first instance, a fix was considered by the Joint Select Committee on Deficit Reduction in 2011, but the committee failed to produce an overall budget proposal, and a permanent fix died along with it. The second chance came during negotiations earlier this year of a House/Senate conference committee formed to extend policy on the "doc fix" as well as a payroll tax holiday and unemployment insurance. Conferees could not agree on how to pay for a permanent fix, however, instead opting for the 10-month fix that the President signed into law.
Rather than wait until 2013, some lawmakers want to get started trying to fix the system this year, although most observers believe a permanent fix has little chance of becoming law in 2012 because sweeping new policies are not often considered in an election year. Later this year, House Republicans are expected to consider legislation to reform the system permanently by phasing out the current Medicare fee-for-service system. Insiders say the legislation would aim to replace the "one-size-fits-all" approach of the current payment system with a new system that is "not quite as top-down as what you've seen." The House Ways and Means and Energy and Commerce committees are working together on the legislation.
In October 2011, the Medicare Payment Advisory Commission recommended Congress scrap the current Medicare reimbursement system and pay for the repeal through cuts in pay to specialists and other providers. The 10-year recommendation would freeze payment levels for primary care doctors over the decade but would cut other Part B providers by 5.9 percent for the first three years, followed by a freeze.
Representative Allyson Schwartz (D-PA), who has been working with Representative Phil Roe (R-TN) on a physician payment reform plan, has drafted a proposal in which the sustainable growth rate formula would be repealed, followed by a six-year transition in which physician payments are modified until a new system is implemented. Schwartz recently told reporters that lawmakers will keep trying to repeal the current system, and action during the lame-duck session is possible, although an already-full agenda may prevent consideration of such a plan.
Paying for a fix will be problematic. There is agreement between Democrats and some Republicans to use unspent funds from the wars in Iraq and Afghanistan to help pay for a fix, but House GOP leadership has rejected the idea. Without the war funds, finding a way to pay for a permanent fix will be daunting. Funding also could be found if the doc fix is included in a larger entitlement reform package that includes such provisions such as raising Medicare's eligibility age from 65 to 67.
While some Hill observers say it will take a huge act of political will for Congress to pass a permanent fix, they predict it will happen eventually, since the current system is unsustainable and is forcing physicians to stop seeing Medicare patients.
Permanent Doc Pay Fix Will Come, But When?
On February 2, 2012, President Obama signed payroll tax legislation that included a provision canceling the Medicare physician pay cut of 27 percent through the end of the year and replacing it with a pay freeze. A growing consensus exists in Washington that a permanent fix will feature several years of legislative payment updates, followed by a transition to a new payment system; however, it remains unclear when Congress will approve a permanent fix.
If Congress wants to avert a 32 percent Medicare reimbursement cut for physicians that would take effect January 1, 2013, it will have to address the issue during a lame-duck session after the upcoming presidential and congressional elections. Because the session could be politically contentious and include several other important issues to address, it is unlikely Congress would tackle a permanent fix then. More likely to occur after the presidential election is that Congress would again pass a short-term fix canceling the January 1 pay cut. That would allow a permanent fix to be included in a larger legislative package of tax and entitlement reform that could be considered by a new Congress.
According to some policy experts, there is growing certainty that a permanent fix would entail Congress passing yearly payment updates until the Centers for Medicare and Medicaid Services can test and implement an alternative payment system. Legislation eventually passed by Congress most likely will include a phase-in period. For example, in May 2011, the American Medical Association told the House Energy and Commerce Health Subcommittee that the current system should be repealed, followed by a five-year period of legislative updates and then "a transition to an array of new payment models designed to enhance care coordination, quality, appropriateness and costs."
During the past year, Congress had two opportunities to advance a permanent fix. In the first instance, a fix was considered by the Joint Select Committee on Deficit Reduction in 2011, but the committee failed to produce an overall budget proposal, and a permanent fix died along with it. The second chance came during negotiations earlier this year of a House/Senate conference committee formed to extend policy on the "doc fix" as well as a payroll tax holiday and unemployment insurance. Conferees could not agree on how to pay for a permanent fix, however, instead opting for the 10-month fix that the President signed into law.
Rather than wait until 2013, some lawmakers want to get started trying to fix the system this year, although most observers believe a permanent fix has little chance of becoming law in 2012 because sweeping new policies are not often considered in an election year. Later this year, House Republicans are expected to consider legislation to reform the system permanently by phasing out the current Medicare fee-for-service system. Insiders say the legislation would aim to replace the "one-size-fits-all" approach of the current payment system with a new system that is "not quite as top-down as what you've seen." The House Ways and Means and Energy and Commerce committees are working together on the legislation.
In October 2011, the Medicare Payment Advisory Commission recommended Congress scrap the current Medicare reimbursement system and pay for the repeal through cuts in pay to specialists and other providers. The 10-year recommendation would freeze payment levels for primary care doctors over the decade but would cut other Part B providers by 5.9 percent for the first three years, followed by a freeze.
Representative Allyson Schwartz (D-PA), who has been working with Representative Phil Roe (R-TN) on a physician payment reform plan, has drafted a proposal in which the sustainable growth rate formula would be repealed, followed by a six-year transition in which physician payments are modified until a new system is implemented. Schwartz recently told reporters that lawmakers will keep trying to repeal the current system, and action during the lame-duck session is possible, although an already-full agenda may prevent consideration of such a plan.
Paying for a fix will be problematic. There is agreement between Democrats and some Republicans to use unspent funds from the wars in Iraq and Afghanistan to help pay for a fix, but House GOP leadership has rejected the idea. Without the war funds, finding a way to pay for a permanent fix will be daunting. Funding also could be found if the doc fix is included in a larger entitlement reform package that includes such provisions such as raising Medicare's eligibility age from 65 to 67.
While some Hill observers say it will take a huge act of political will for Congress to pass a permanent fix, they predict it will happen eventually, since the current system is unsustainable and is forcing physicians to stop seeing Medicare patients.
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