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Congress Averts Physician Medicare Payment Cuts

February 17, 2012

Today, the House passed a bill, H.R. 3630, by a vote of 293 to 132, which approves a deal reached by congressional negotiators to extend the payroll tax deduction, unemployment insurance and Medicare physician payments for another 10 months. Physicians are currently scheduled to receive a 27.4% cut beginning March 1 unless Congress approves the agreement. The Senate quickly followed suit and approved the measure by a vote of 60 to 36. President Obama has stated that he will sign the measure into law.

The freeze in physician payments at the current level costs about $20 billion and is offset through various health care spending reductions, including:

  • $7 billion reduction in Medicare reimbursement to hospitals for the uncollected portions of beneficiary cost-sharing requirements (“bad debt”);
  • $5 billion cut to the Prevention and Public Health Fund established by the Affordable Care Act;
  • $4 billion from rebasing Medicaid Disproportionate Share Hospital (DSH) payments beginning in FY 2021;
  • $3 billion from a 2% cut in clinical lab services in 2013; and
  • $2.5 billion cut to Louisiana’s Medicaid federal disaster matching rate.

The accord extends Medicare physician payments through the end of the year (after the November elections) and will require Congress to address this issue, and many others, again during the lame-duck session.

“Congress again has demonstrated that it recognizes the importance of not cutting Medicare payments to physicians, which is a positive action, especially given the nation’s financial crisis,” said Dr. David Seaberg, president of ACEP. “However, it is not an increase, and it is not the long-term solution that we have been advocating for. ACEP will continue to press members of Congress and their staffs to replace the current payment system with one that fairly reimburses physicians. The nation’s elderly population is growing, and additional Medicare resources will be needed to meet their emergency care needs.

“Unfortunately, this current action by Congress only delays physician reimbursement cuts for another 10 months. This cycle is unsustainable, and the current formula needs to be replaced with one that is based on an annual inflationary update, which is how most of our associates in health care are reimbursed," he said.

ACEP, as well as many other physician organizations, had been urging Congress to fully repeal the flawed Medicare physician payment formula and use unallocated funds from the Overseas Contingency Operations (OCO) account to cover the $315 billion cost. However, Congressional leaders opposed this approach and election year politics dictated another short-term resolution.

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