Medicare pay freeze closer to passage in Congress

Recently passed legislation includes a separate measure allowing Congress to use up to $82 billion to reverse rate cuts, without the need for offsets.

By Chris Silva — Posted Feb. 16, 2010

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Congress took another step toward avoiding a 21.2% cut in Medicare physician payment slated for March 1 when the House passed legislation on Feb. 4 to authorize an increase in the government's debt limit and to implement statutory "pay-as-you-go" provisions.

The vote cleared the way for President Obama's signature and will ensure the federal government has the capital necessary to avoid defaulting on its financial obligations. Statutory pay-go generally requires lawmakers to find money in the budget to pay for any new mandatory spending or tax cuts. Several legislative priorities are exempt from the new requirements, such as the extension of some tax cuts from the Bush administration, thereby allowing Congress to run up the federal deficit to pay for them.

Legislation to prevent Medicare physician pay cuts also would receive a partial exemption. Up to $82 billion worth of higher Medicare pay to doctors could be approved without the need to find offsets. This corresponds to a five-year freeze of current Medicare rates that would be followed by additional rate cuts.

Lawmakers must still approve separate legislation to reverse upcoming pay reductions, starting with the 21.2% cut. If Congress passes any bill with a price tag larger than that for a five-year freeze, additional offsets would be required. At this article's deadline, lawmakers were considering attaching a short-term Medicare payment patch to a pending national job creation bill.

The House on Feb. 4 voted 217-212 to raise the federal debt limit, then voted 233-187 to approve statutory pay-go. The Senate had passed the debt limit piece with attached pay-go provisions by a 60-39 vote on Jan. 28.

The American Medical Association has stated it will not support any more temporary patches of the sustainable growth rate formula that determines Medicare pay, whether for one year or five years, and it is calling on Congress to enact permanent reform.

The House has passed a long-term Medicare pay overhaul with a projected 10-year cost of about $210 billion, roughly $130 billion more than the proposed pay-go exemption. The AMA wants the Senate to accept the House measure rather than take up any new short-term bill.

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