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Senate Averts 24% Cut in U.S. Physician Payment Rates

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April 1 (Bloomberg) -- The U.S. Senate cleared for President Barack Obama’s signature a one-year delay of a 24 percent cut in payment rates for physicians who accept Medicare patients.

The Senate yesterday voted 64-35, with 60 required, to pass the measure. Fifteen Republicans voted with Democrats in favor of the delay while six Democrats voted against it.

Majority Leader Harry Reid, a Nevada Democrat, agreed to the one-year “patch,” though he said he preferred a permanent solution to head off the payment cut that lawmakers have delayed every year since 2003.

“We need to take action on this to ensure that Medicare patients will be able to see their doctor,” Reid said on the Senate floor. “This legislation is not perfect, it’s not ideal.”

The measure was sent to Obama just hours before the midnight deadline for averting the cuts mandated under the 1997 law that set up the cost controls for Medicare, the federal insurance program for the elderly and disabled.

The bill would replace the estimated 24 percent cut in Medicare reimbursement rates for physicians and hospitals, scheduled to start today, with a 0.5 percent increase.

Lawmakers of both parties generally agree on putting off the cuts. They’ve differed on whether to enact a short-term patch, or delay, or to eliminate the formula that requires the reductions.

‘Put Off’

“We are going to put off until tomorrow what we should be doing today,” Senator Tom Coburn, an Oklahoma Republican, said before yesterday’s vote. He voted against the measure.

The House passed the bill, H.R. 4302, by voice vote on March 27, a move that masked the difficulty Republican leaders encountered in finding support for it amid opposition fueled by doctors’ groups, who were seeking a longer-term agreement.

Spending on Medicare totaled about $580 billion in 2012, when it provided health care for 49 million Americans, according to the Centers for Medicare and Medicaid Services.

Medicare spending is projected to reach $1.123 trillion in 2022.

The cap on Medicare reimbursement rates, known as the sustainable growth rate, was enacted in 1997 to serve as a check on spending. In practice, delays have become so common that bills to avoid the cuts have a nickname: the “doc fix.”

17th Delay

This is the 17th time in a decade that Congress has voted to enact a delay.

The American Medical Association, which has pressed for a permanent resolution of the reimbursement issued, said it was disappointed in the vote.

The association “is deeply disappointed by the Senate’s decision to enact a 17th patch to fix the flawed Sustainable Growth Rate (SGR) formula,” AMA President Ardis Dee Hoven said in a statement. “Congress has spent more taxpayer money on temporary patches than it would cost to solve the problem for good.”

The bill “perpetuates an environment of uncertainty for physicians,” Hoven said in the statement.

For the first few years after the formula was enacted, expenditures didn’t top the targets, according to a program summary compiled by the Congressional Research Service.

That changed in 2002 when the formula triggered a 4.8 percent cut to physician payments.

The next year, doctor payments were set to be reduced by another 4.4 percent. Under lobbying pressure, Congress raised them 1.7 percent. In 2004, the cut would have been 4.5 percent. Instead, Congress raised rates 1.5 percent. It has continued that way since.

Lawmakers say they want to end the cuts, though they’ve been stuck on a way to cover the cost, which would top $140 billion over 10 years.

Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, unsuccessfully sought to substitute his measure to permanently halt the payment reductions.

“I believe it’s time to end this fiction,” Wyden said.

To contact the reporters on this story: Kathleen Hunter in Washington at khunter9@bloomberg.net; James Rowley in Washington at jarowley@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net Mark McQuillan

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