Medicare payment formula fix unlikely in 2010

December 1, 2009

It has become increasingly doubtful that even if Congress passes some form of health care reform this year or in early 2010, reform of the formula on which physician Medicare payments are calculated will most likely not be included, and that is bad news.

If that likelihood becomes reality, once again physicians will be faced with their annual battle to convince Congress to sidetrack mounting pay cuts resulting from the sustainable growth rate (SGR) formula, which, unless addressed in some form in December, will force a 21.2% average fee cut in 2010 and additional estimated reductions of about 2% annually over the next several years. (Also see, "Urology takes heavy hit in 2010 Medicare updates".)

Late in October, Sen. Debbie Stabenow (D-MI) introduced the Medicare Physician Fairness Act (S. 1776), which would have abandoned the current pay formula and set future annual payment updates at zero, a revision estimated to cost about $245 billion over 10 years. The bill would have repealed SGR, eliminating its accumulated spending target debt, which triggers the annual negative Medicare payment updates.

But Stabenow's bill failed to make it through the process in the Senate that would have brought it to the floor for a vote.

"I don't know of a single person who wants to see reimbursement cuts to doctors who treat Medicare patients, but if Congress is going to step in and prevent it, we shouldn't do it by racking up more debt on the government's credit card," argued Senate Minority Leader Mitch McConnell (R-KY).

Long-term remedy proposed

In early November, as the House of Representatives prepared for what was a narrow approval, 220-215, of its version of health care reform, Reps. John Dingell (D-MI), Henry Waxman (D-CA), and other key Democrats introduced the Medicare Physician Payment Reform Act of 2009 (HR 3961), which would restructure the SGR with the objective of providing a long-term remedy.

The bill, which the Congressional Budget Office (CBO) estimated would cost $210 billion over 10 years, would make these key changes:

According to the CBO, the changes would increase Medicare fees to physicians by about $195 billion over 10 years and result in higher spending for both Medicare Advantage and the Department of Defense's TRICARE program, estimated to total $64 billion over the 10-year period.

The plan would be offset by about $49 billion in Medicare Part B premium increases beginning in 2011.

Cost a major factor

Although Congressional leaders separated the Medicare physician payment reform issue from the broader health care reform initiative in an effort to keep the total cost under $1 trillion over 10 years, budget-conscious lawmakers aren't buying.

Sen. Charles Grassley (R-IA) said Stabenow's bill "undermines the president's commitment to making sure health care reform won't add a dime to the deficit when one of the most expensive problems in the Medicare program is removed from overall reform legislation."

House Speaker Nancy Pelosi (D-CA) also reiterated that she could support an SGR fix in 2009 only if offsets are included to cover the cost. That will be difficult, considering the deep cuts in Medicare that were already included in the House-passed bill to help pay for overall reform.

Although those budget concerns appear to make it unlikely that a permanent fix will be approved, almost certainly not as part of health reform legislation, it is possible that a less costly, temporary solution will be found. For example, Sen. Kent Conrad (D-ND), chairman of the Senate Budget Committee, proposed replacing this year's cuts with 0.5% pay increases for 2 years at a cost of $25 billion.

If that, or a similar "solution" is reached, physicians serving Medicare patients will once again be faced with making annual appeals to Congress seeking relief, beginning in 2012, when the projected payment cut will be even deeper.

Once again, it appears that Congress is preparing to kick this can down the road.

Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.