American Society of Hematology

Congress Struggles with the Cost of Preventing Cuts to Physician Medicare Payments

Published on: August 08, 2012

Physicians are scheduled to receive nearly a 27 percent cut from Medicare beginning January 1, 2013, unless Congress takes legislative action to prevent it. Most Members of Congress have indicated that they strongly oppose these draconian cuts, consequently, the problem to fix is not convincing the Congress that this is bad, but finding the amount of money lawmakers would need to cuts elsewhere, or "offsets" to pay for preventing the cuts to physician payment.

For example, a one-year patch to block the scheduled cut in physician Medicare payment rates would require offsets totaling $18.5 billion over 10 years, according to the Congressional Budget Office. If Congress wanted to block the scheduled 27 percent cut and hold rates flat for two years — 2013 and 2014 — it would require offsets totaling $48 billion over the period of fiscal 2013 to 2022. Both estimates assume an approach that involves overriding the existing sustainable growth rate (SGR) formula during the period of the physician payment patch but not doing away with it. As a result, this means that there would be a sharp cut that would vary from 22 percent to 26 percent in the year after the patch, if the Congress follows this approach.

ASH has advocated for a solution in which physician rates would be maintained or rise modestly for a period of about three years while Medicare experiments with paying doctors other than through the SGR. This would help identify the best approach to paying physicians. To do that, Congress would have to find offsets totaling $72 billion in fiscal 2013-22 to block the 27 percent cut and let rates rise modestly with medical inflation in 2013, 2014 and 2015.

If Congress took the same approach, but limited the expected inflation update to 2013 and 2014, the cost would total $45.5 billion. The inflation updates would be 0.6 percent in 2013, 1.7 percent in 2014, 2.5 percent in 2015 and 2.2 percent in 2016, by CBO's analysis.

The high cost of fixing or even just delaying the physician payment cuts means this will not be easy for the Congress to solve. It is critical that all Members of Congress hear from their physician constituents about the need to avert the scheduled physician payment cut. Please visit the ASH Advocacy Center to participate in the Society's on-line advocacy campaign today! 

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