Medicare physician pay frozen until 2013

Washington -- Congress has deferred steep physician payment cuts under the Medicare program until 2013 but has left in place a pay formula that will slash physician rates by an estimated 32% next year.

A 27.4% cut was set to hit doctor pay on March 1, but federal lawmakers adopted legislation that continues current Medicare payment rates to physicians and other health professionals under Part B for the remainder of 2012.

The legislation had been drafted by a congressional conference committee that was created to craft a longer-term solution after lawmakers agreed only to a two-month delay of the Medicare doctor pay cut in December 2011. The newly passed bill also includes extensions of other health provisions, such as higher pay to physicians practicing in low-cost areas and exceptions to coverage caps on outpatient therapy services.

The House approved the measure on Feb. 17 by a vote of 293-132, and the Senate followed suit the same day with a 60-36 vote. President Obama said he will sign the package, which also extends a payroll tax cut for 160 million working Americans and preserves some extended unemployment insurance to those out of work for long periods.

The conference committee had debated allocating unspent overseas war funds to cover the more than $300 billion cost to repeal the SGR altogether, but lawmakers could not find enough support for the idea, which some dismissed as a budget gimmick.

The temporary payment patch will lead to deeper cuts next year. The Congressional Budget Office has projected that simply freezing Medicare pay rates in 2012 would cause the scheduled reduction to deepen to 32% in 2013.

The American Medical Association and other physician organizations opposed the temporary approach because it failed to replace the payment formula. The patch costs nearly $20 billion but would increase the future cost of a permanent fix by $25 billion, said AMA President Peter W. Carmel, MD.

"We are deeply disappointed that Congress chose to just do another patch -- kicking the can, growing the problem and missing a clear opportunity to protect access to care for patients," Dr. Carmel said in a statement before the congressional votes. "Shortly after the coming elections, access to care for seniors and military [families] will again be threatened by an even larger cut, and members of Congress will need to take swift action to end the broken formula."

The 10-month Medicare pay patch also left many of those voting for the bill displeased with the situation. Rep. Dave Camp (R, Mich.), who was co-chair of the conference committee, preferred a House bill that included a two-year payment fix that was fully offset by cuts elsewhere in the health system.

"If I had my way, the bill passed by the House in December would be law," Camp said. "That was the only bill that extended these programs through the end" of 2013.

The temporary doctor pay freeze in the approved package is paid for by a $5 billion reduction to a federal prevention fund set up under the health system reform bill, reduced payments to hospitals for patients' bad debt and pay cuts to clinical laboratories.

House Minority Whip Steny Hoyer (D, Md.) said he would vote against the conference report because it also raised pension contribution requirements for federal workers to help pay for the package's other provisions. But he also criticized his colleagues for not addressing the SGR permanently, calling the 10-month extension a "silly little game."