Congressional budget short on answers for Medicare pay formula

Washington -- Congress on April 29 adopted a fiscal 2010 budget resolution that leaves some room for Medicare physician payment reform, but not nearly as much as doctors would have liked.

The $3.56 trillion budget allows the House to pass reform legislation costing up to $38 billion without the need to find offsets in the form of new revenue or cuts from other parts of Medicare. That would cover the expected cost of freezing Medicare rates at current levels in 2010, 2011 and part of 2012 instead of implementing the reductions required by current law. The Senate, however, still would need to find full offsets for any bill that prevents the cuts or boosts Medicare pay.

The House version of the budget resolution initially proposed suspending "pay-as-you-go" budget rules for a 10-year payment overhaul costing up to $285 billion. Pay-go rules compel lawmakers to find offsets that will fully pay for rate changes or other spending priorities rather than run up deficit spending. An exemption that large could have made it easier for Congress to pass a more comprehensive payment overhaul.

Physician organizations, including the American Medical Association, were hopeful that the initial House proposal would have made it into the final budget resolution.

"Overwhelming majorities of Democrats and Republicans in Congress agree that the current Medicare physician payment formula is flawed and should be scrapped," said AMA Board of Trustees Chair Joseph M. Heyman, MD. "The AMA appreciates that the House-Senate conference agreement on the budget resolution apparently makes some allowance for the House to address this issue. However, physicians still face the prospect of steep cuts after that protection ends."

Ted Epperly, MD, president of the American Academy of Family Physicians, said the academy is grateful to see the $38 billion House pay-go exemption in the final budget because "anything that forestalls the SGR is a good move." However, AAFP was disappointed to see negotiators significantly pare down the $285 billion figure in the original House proposal. "This makes the box narrower and tighter," Dr. Epperly said.

The AMA had urged Congress to adopt a more realistic budgetary baseline going forward for the widely criticized Medicare physician payment mechanism, known as the sustainable growth rate formula. While President Obama's budget proposal called on Congress to set aside $330 billion over the next decade to account for the expected costs of overhauling the pay system, lawmakers declined to re-base the SGR formula in their own budget.

"The AMA is very disappointed that the budget resolution conference agreement fails to ensure a long-term solution to the Medicare physician payment problem," Dr. Heyman said. "Continued uncertainty about future Medicare payments will divert attention from important health reform issues and the role physicians play in successful patient-centered reforms."

While the final budget resolution is non-binding on Congress, it sets the framework for lawmakers to make legislative decisions on taxes, appropriations and entitlement program spending. The House adopted the blueprint by a 233-193 vote and the Senate by a 53-43 vote, with no Republicans in either chamber voting for the budget.

Parliamentary tactics

Despite the partial exemption of pay-go provisions for House consideration of Medicare pay reform, some lawmakers intend those rules for finding budgetary offsets to be written into actual law moving forward instead of simply being part of the chamber's own parliamentary rules.

In an April 28 letter to House and Senate members of the budget conference committee, House Speaker Nancy Pelosi (D, Calif.) and House Majority Leader Steny Hoyer (D, Md.) said the House will not consider legislation on four major bills -- including one on reforming Medicare's pay formula for doctors -- "unless these conference reports or bills include statutory pay-go ... or statutory pay-go has already been enacted into law."

That means any attempt to overhaul the SGR formula in the House also could carry a provision that would require Congress to find full offsets for any future payment patch or long-term fix.

The conference agreement also retains so-called reconciliation instructions that would allow Senate Democrats to pass major health reform with only 51 votes instead of the 60 usually needed to end debate. Republicans also would be limited in the number of amendments they could offer.

The reconciliation process is normally reserved for complicated deficit-reduction legislation but has been used to pass unrelated measures. GOP lawmakers have expressed concerns that Democrats will use the reconciliation process to muscle a partisan reform plan through Congress, but Democratic leaders have said they will use the option only as a last resort if it becomes clear that no consensus measure will pass this year.

Dr. Epperly said reconciliation is a welcome backup measure that "allows for more options to be considered to ensure [reform] won't die on some committee table."