Congress Likely to Stiff AMA on Medicare Reimbursement Fix

Published May 31, 2016

The debate over national health care reform has stalled in the wake of the victory by Republican Scott Brown in the recent Massachusetts Senate election. Moderate Democrats want no further action before the midterms. Liberals argue the race was a signal that Democrats need to turn further left, toward a bill with a robust public option.

While Democrat leaders debate a plan for action, Congress is under pressure to make a decision on a policy with massive ramifications for America’s doctors: what to do about a 21.2 percent reduction in Medicare reimbursement rates scheduled to go into effect on March 1.

Patching Mandatory Cuts

Whereas the major components of the health care overhaul have received significant attention, the debate over the “doc fix” has gone on largely out of public view. Since 1999, Medicare physician reimbursements have been determined by a calculation based on the sustainable growth rate (SGR). Since 2003, Congress has passed annual SGR “patches” to prevent otherwise mandatory cuts from taking effect.

The nation’s doctors—working through the American Medical Association—have lobbied for a permanent fix. That legislation was supposed to pass last year, as part of the health care overhaul, and its absence now creates a politically difficult situation.

Increases in physician reimbursements are calculated to add more than $200 billion to the federal budget deficit over the next ten years. That hefty price tag eventually led Congressional leaders to remove it from the health care legislation, in an effort to reduce the apparent cost. But in order to ensure continued AMA support for the president’s plan, Democrats promised to move the doc fix in tandem with the overhaul.

Unkept Promises During Debate

The House and Senate leadership attempted to pass the reimbursement patch as a separate piece of legislation in 2009. It passed the House but was defeated in the Senate last October, primarily as a result of deficit concerns. At the time the Senate Democrat leadership forcefully argued the bill was essential.

“The SGR must be repealed,” said Sen. Max Baucus (D-MT), chair of the Senate Finance Committee, speaking on the Senate floor in October 2009. He cited the threat of “devastating payment cuts” and called on his colleagues to “avoid merely putting another band-aid on the broken physician payment system.”

“Without passing this bill and permanently ending the schedule of physician payment cuts, doctors will continue to struggle to budget for the future without knowing with absolute certainty that Congress will act to prevent payment reductions,” said Sen. Pat Leahy (D-VT) in response to Baucus.

In more than one statement to the press, Majority Leader Harry Reid (D-NV) promised Congress would enact “a multiple-year fix” once the health care overhaul debate was over.

No Consensus on a Solution

According to Capitol Hill sources, there is no consensus on how to proceed. The Senate, with the backing of the White House, approved ‘pay-go’ legislation on January 28th which specifically accommodates a five-year doc fix, suggesting the Democrat leadership may be considering a halfway measure.

After that, President Obama submitted a budget plan that substantially increased the projected cost of the fix. Where it was once estimated to reduce federal revenue by $210-$250 billion over 10 years, the administration now estimates the cost to be $371 billion.

Given concerns over mounting federal budget deficits, it will be hard for legislators to approve such an expansion in the debt. Many in Congress will also be reluctant to approve either spending cuts or tax increases to offset the cost, particularly in an election years. Under the circumstances it’s not clear there’s a congressional majority for any proposal to enact this AMA priority.

New Uncertainty as Deficits Mount

“The release of the president’s budget creates new uncertainty as Congress attempts to enact a fix,” said James Capretta, a fellow in the Economics and Ethics Program at the Ethics and Public Policy Center in Washington, DC. Formerly an associate director at the White House Office of Management and Budget, where he was the top budget official for health care, Capretta believes even lawmakers who support a permanent repeal of the SGR must account for the fact that “the cost keeps going up and up.”

So far, Congress has shown no appetite for allowing such drastic reductions in reimbursements to take effect. An SGR fix has passed Congress each year because lawmakers recognize the potential impact on Medicare patients. The 21.2 percent reduction currently on the table was originally scheduled to take effect on January 1, but Congress passed a short-term extension to defer it until March, after President Obama plans to propose his own health care plan.

If there’s no consensus for a permanent solution, Capitol Hill sources expect Congress to approve a short-term patch again. The AMA will have nothing to show for its cheerleading in the health care reform effort, but thanks to the election in Massachusetts, they’re not likely to be any worse off, either.

Brian Faughnan ([email protected]), a former staffer on Capitol Hill, writes from Virginia.


Internet Sources:

Heritage Foundation: How the Medicare Doc Fix Would Add to the Long-Term Medicare Debt, by Andrew J. Rettenmaier and Thomas R. Saving

National Center for Policy Analysis: The Hidden Cost of the Doc Fix, by Jillian Bandes