March 27 (Bloomberg) — Congress is racing to beat a March 31 deadline to avoid a 24 percent cut in physician payment rates under Medicare.
Still, there's no sense of panic leading up to the vote — it's accepted that lawmakers of both parties will agree to delay the cuts. It'll be the 17th time they've done so in a decade.
"What we do is not real," said Steny Hoyer, the second- ranking House Democrat, adding that "everybody knows" lawmakers will delay the cuts again. "We want the medical community providers to continue to provide services to Medicare patients, to seniors. So we know we're going to do it."
Recommended For You
The House is set to vote today on a bill that would delay the rate cuts for about a year. Senate Majority Leader Harry Reid told reporters he wants to address the issue soon.
"The House will act tomorrow, and I would expect the Senate would probably act pretty quickly thereafter," House Speaker John Boehner told reporters yesterday in Washington.
Spending on Medicare, the federal insurance program for the elderly and disabled, totaled about $580 billion in 2012, when it provided health care for 49 million Americans, according to the Centers for Medicare and Medicaid Services. It's projected to reach $1.123 trillion in 2022 — more than the U.S. will spend this year on all discretionary spending from operating national parks to building aircraft carriers.
The cap on Medicare reimbursement rates, known as the sustainable growth rate, was supposed to serve as a check on spending. In practice, lawmakers have dodged and delayed scheduled cuts to payment rates every year since 2003.
It's so common that bills to avoid the cuts now have a nickname: the "doc fix."
Failed cuts
The sustainable growth rate was envisioned as "a way to ensure that medical-cost growth in Medicare didn't go out of control," said Kavita Patel, a fellow and managing director at the Brookings Institution in Washington who's also a practicing primary care physician.
Congress didn't then — and still doesn't — have an appetite for cutting doctor payments. Rather, Patel said, the sustainable growth rate was focused on the "out years" when costs were projected to rise.
For the first few years after the 1997 formula was enacted, expenditures didn't top the targets, according to a program summary compiled by the Congressional Research Service.
Tipping point
That changed in 2002 when the formula triggered a 4.8 percent cut to physician payments.
The next year, doctors' payments were set to be reduced another 4.4 percent. Under lobbying pressure, Congress raised them 1.7 percent. In 2004, the cut would have been 4.5 percent. Instead, Congress raised rates 1.5 percent. It has continued that way since.
"The rates of growth keep going up and they're always higher than rates of inflation," Patel said. "If you think of it as an interest rate, it just keeps compounding."
Reid Blackwelder, president of American Academy of Family Physicians, said the current fix is a "missed opportunity to permanently repeal a flawed Medicare formula that has plagued the health-care system for more than 10 years."
The measure the House will take up today would replace the estimated 24 percent cut with a 0.5 percent increase in payments through Dec. 31, with no increase from Jan. 1 through March 31, 2015. The Senate hasn't committed to holding a vote on the measure, though lawmakers say there's still time to avoid the rate cuts.
'Flex time'
"March 31, which is to say next Monday, the SGR authority expires," Hoyer, a Maryland Democrat, said. "We probably still have a little bit of flex time to get the job done, but we probably ought to just bite the bullet and get it done."
That "flex time" could come from the Obama administration delaying cuts by weeks if Congress is close to a deal, or from lawmakers making the measure retroactive, which they've done before.
Lawmakers say they want to permanently end the cuts and face lobbying from doctors' groups. Yet they're stuck on a way to cover the cost.
The Congressional Budget Office, Congress's nonpartisan budget referee, has to score bills assuming the law will be followed, even if it won't be. Permanently replacing the formula would cost about $140 billion, CBO said, plus another $40.3 billion for provisions to continue payments to providers of services like ambulances and therapy, and for geographical adjustments in doctor pay.
'Big chunk'
"It's the pay-fors," said Representative Joe Pitts, a Pennsylvania Republican and chairman of the House Energy and Commerce Committee's subcommittee on health, when asked why lawmakers couldn't reach a deal to end the cuts. "We had agreement on the policy, but the pay-fors, that's a big chunk and we're not close on that amount of money."
Some lawmakers and physicians groups say enacting a year- long patch will just make things worse in finding a long-term resolution to the Medicare payment situation.
The American Medical Association was among the doctors' groups saying it would oppose the bill.
The legislation "actually undermines future passage of the permanent repeal framework," AMA President Ardis Dee Hoven said in a statement.
Senate Finance Committee Chairman Ron Wyden said lawmakers face a choice between a patch "reinforcing a flawed payment formula" or a long-term measure that would provide certainty for seniors and doctors and end what he called a "budget fiction" that is the sustainable growth rate.
"My choice is to end the status quo," Wyden, an Oregon Democrat, said in a statement. "There is no reason to wait."
With assistance from James Rowley and Kathleen Hunter in Washington.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
