Senate passes bill to avoid Medicare pay cut

The House could take up companion legislation as soon as Dec. 9, paving the way for a full calendar year without pay patch debates.

By Chris Silva — Posted Dec. 8, 2010

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The Senate late Dec. 8 passed a measure that prevents any Medicare physician payment cuts through 2011.

A bipartisan group of four Senate leaders on Dec. 7 had proposed a one-year delay to the 25% Medicare physician pay cut scheduled to go into effect Jan. 1, 2011, and the full Senate followed suit and passed the bill by unanimous consent.

Senate Finance Committee Chair Max Baucus (D, Mont.), Sen. Charles Grassley (R, Iowa), Senate Majority Leader Harry Reid (D, Nev.) and Senate Minority Leader Mitch McConnell (R, Ky.) took the lead in crafting the bill, coming up with a deal that allowed the legislation to go to the Senate.

If the House approves the legislation and it is signed into law, a 25% cut in Medicare physician pay scheduled for Jan. 1, 2011, would be avoided. It would be the fifth time in 2010 that Congress has passed legislation averting a cut in Medicare physician pay, which was mandated under the sustainable growth rate formula.

Since 2002, the formula, based on the economy and Medicare spending, has resulted in negative updates, which Congress has overrode.

President Obama has lent his support to the current Senate bill, which keeps pay at its present level, including the 2.2% increase that physicians received when Congress overrode an SGR-mandated pay cut in June. Obama said he hopes a permanent fix of the Medicare payment system would be reached in 2011.

"I encourage Congress to act quickly on this proposal," Obama said. "This agreement is an important step forward to stabilize Medicare, but our work is far from finished. For too long, we have confronted this reoccurring problem with temporary fixes and stop-gap measures. It's time for a permanent solution that seniors and their doctors can depend on, and I look forward to working with Congress to address this matter once and for all in the coming year."

The American Medical Association congratulated the Senate for its bipartisan action. The AMA and others are advocating that with the Medicare pay cut averted, lawmakers spend 2011 coming up with a long-term solution for SGR.

"Stopping the cut for one year will inject some much-needed stability into the system for seniors and physician practices, who have spent this year in limbo because of five short-term delays," said AMA President Cecil B. Wilson, MD. The delays include the 2010 overrides and a two-month patch passed in December 2009 that covered January and February 2010.

"The AMA will be working closely with congressional leadership in the new year to develop a long-term solution to this perennial Medicare problem for seniors and their physicians," Dr. Wilson said. "This one-year delay comes right as the oldest baby boomers reach age 65, adding urgency to the need for a long-term solution before this demographic tsunami swamps the Medicare program."

Dr. Wilson urged the House to pass companion legislation quickly before the Jan. 1, 2011, deadline. The House could vote on the bill as soon as Dec. 9.

The delay in Medicare cuts is expected to cost $19.2 billion and would be paid for by expanding Internal Revenue Service recoveries under the national health system reform law. The law offers subsidies based on income to people who sign up for coverage through the health insurance exchanges spelled out by the legislation. If a person earns more than he or she projected that year, the IRS can collect a limited amount of the subsidies paid. The bipartisan agreement would raise that limit, increasing the subsidies the IRS can recover.

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