Congress Passes Bill to Postpone Medicare Cuts Through 2012

As expected, both the U.S. Senate and U.S. House of Representatives have passed a bill which provides for another short-term patch to the Medicare Sustainable Growth Rate (SGR) formula. The legislation averts a 27.4 percent cut in Medicare physician payment rates scheduled for March 1 and extends current rates until the end of 2012.

Other expiring Medicare policies were also extended through the end of the year, including the “floor” on geographic adjustments to the physician work component of the Medicare fee schedule, the therapy cap exemption process and ambulance add-on payments. Two policies—Section 508 hospital and special pathology payments—will be phased out and mental health add-on payments and pay increases for bone density scans have been eliminated.

According to a report from ModernHealthcare and a summary of the legislation, the cost of the legislation is offset in a number of ways.

"As expected, lawmakers had to agree on ways to pay for the Medicare spending in the bill, which amounts to about $21 billion over 10 years. One so-called “offset” in the agreement would lower the reimbursement level that Medicare pays hospitals for bad debt payments. Currently, Medicare reimburses hospitals and skilled nursing facilities for 70% of the beneficiary cost-sharing they are unable to collect, while community health centers and dialysis centers are reimbursed at 100%. The bill agreed in conference would decrease the reimbursement level to 65% starting in fiscal 2013 for those providers currently reimbursed at 70% and phase in the 65% level over three years for those other providers who now receive 100% reimbursement. These changes are expected to reduce spending by about $6.9 billion over 10 years.

Another provision would reduce payment rates for clinical laboratory services by 2% in 2013. Then, as that reduction is applied after the update is calculated, the 2013 amount would become the new “reset base” on which to apply the 2014 update. According to the summary, the bipartisan Congressional Budget Office estimates this provision could cut spending by about $2.7 billion over 10 years. "

More on the details of the SGR patch are available from ModernHealthcare.

OSMA physician leaders were in Washington D.C. this week meeting with members of Ohio’s Congressional Delegation, including Speaker Boehner (R-West Chester), Sen. Rob Portman (R-Cincinnati) and Sen. Sherrod Brown (D-Avon), to discuss the importance of fixing the flawed Medicare sustainable growth rate (SGR) formula.

The OSMA and the AMA have continued to urge Congress to permanently repeal the Medicare SGR and provide stability in the access to care for Ohio’s seniors and the physicians who care for them. The OSMA is disappointed at this tentative agreement for yet another short-term patch to the flawed SGR. We are continuing our efforts to make sure Congress understands the need to use the rest of 2012 to fix this flawed funding mechanism once and for all.

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