Health-Care Reform 'Savings' to Evaporate When Congress 'Fixes' Medicare Payment System for Doctors

By Christopher Neefus | January 18, 2010 | 7:04 AM EST

Doctors meet with President Obama to discuss Meidcare and health-reform legislation. (AP photo)

( – The Senate version of health-care reform legislation purportedly reduces the deficit by $132 billion over the next decade, according to the Congressional Budget Office (CBO), but those savings could evaporate if a necessary "fix" to the Medicare system, left out of the first bill, is passed.
The Senate is expected to pass the so-called “doctor fix,” legislation that would halt a precipitous 21 percent cut to the reimbursement rates doctors receive for Medicare patients. The cut was scheduled to occur in March 2010 as a way to rein in Medicare costs, but Congress regularly passes legislation to nullify such cuts in order to keep rates at tenable levels for doctors.
A new bill could cost upwards of $200 billion. The American Medical Association (AMA), the powerful physicians’ lobby, is pushing for a vote on the measure in the Senate, according to an AMA official. 
Two such provisions have already failed in the Senate because they would cause the health-care reform bill to increase the deficit and an agreeable cost offset could not immediately be found.
Last week, however, Senate Majority Leader Harry Reid suggested the “doctor fix” would come back because the AMA expected it in exchange for their endorsement of the overall health care bill. 
Reid told his home state's Nevada News Bureau last week: “(T)he doctors endorsed our bill because they know we’re going to do something to take care of them. The AMA endorsed our bill.”

Reid’s office did not return requests for comment about what shape a new doctor’s fix might take, but the original provision, S. 1776, would have frozen reimbursement rates for 10 years at an estimated cost of $246.9 billion -- nearly twice the savings that the CBO says the overall Senate health care bill would provide.

That fix was defeated when 53 Senators, including some Democrats and Sen. Joe Lieberman (I-Conn.), an independent, voted against continuing debate on it because the measure wasn't deficit neutral. 
The other attempted fix was inserted into the overall health-care bill when it was being debated in the Senate Finance Committee. The measure would have provided a one-year increase in rates at a cost of $11 billion, buying another year of time to find a permanent solution. But the provision was stripped out in the Manager’s Amendment, Leader Reid’s final list of changes made to the bill before its Christmas Eve passage.

The AMA official told that physicians supported the removal of the one-year fix from the Manager’s Amendment because it would have stalled a more permanent solution.
Meanwhile, AMA President J. James Rohack M.D., issued a statement last Friday, which said: “Congress can no longer put a band-aid on the problem by passing yet another short-term fix that creates instability in the system for seniors and their physicians.  A permanent fix is crucial to building a solid foundation for health reform.” 

The current Medicare payment rate system was created in 1997, when Congress devised the “sustainable growth rate” (SGR) formula for Medicare, which institutes automatic cuts to reimbursement rates if costs of administering Medicare rise too quickly. The formula was meant as incentive to control costs, but those grew so quickly that the requisite cuts to reimbursement rates under the formula became untenable. As a result, Congress has routinely nullified them in fear of doctors dropping their Medicare patients.
Last month, the Mayo Clinic in Arizona dropped Medicare patients, citing reimbursement rates that were already too low without the cut. 

Beginning this week, the AMA is running television ads in 10 states say the problem is one of "physician access" and pressing the Senate to do something before the rate cuts kick in on March 1, warning that doctors would be forced to make tough choices with their Medicare patients.
“After a lifetime of service and hard work, America promised to honor veterans and seniors with health care they can count on,” the AMA says in the ad. “Tell your senators it’s time to permanently fix the Medicare physician access problem and honor our promise.”
As previously reported, the House of Representatives has already passed a bill that would implement a “fix.” On Nov. 19, two weeks after passing its version of the health-care reform bill, the House approved the Medicare Physician Payment Reform Act, which would permanently change the formula for sustainable growth rates. 

On her Web site, House Speaker Nancy Pelosi (D-Calif.), described the bill (H.R. 3961) as “companion legislation” to the overall health-care bill (H.R. 3962).

It was scored by the CBO as costing $210 billion over 10 years. 
At the time, Rep. Paul Ryan (R-Wis.), the ranking member of the House Committee on the Budget, called dividing up the legislation a “fiscal shell game.”
Ryan said, in a floor speech the day the “fix” passed, the bills were split apart in the House “because they’re (the majority Democrats) trying to pass this health-care bill and suggest that it doesn’t cost anything.”
Ryan sent a letter asking the CBO to score -- or fix the cost of -- the two bills taken together, and the CBO analysis found that the bills would combine to increase the deficit by $89 billion over the first 10 years.
In a Nov. 19 letter replying to Rep. Ryan, CBO Director Douglas Elmendorf said the amount by which the two bills would grow the deficit would keep increasing beyond the first decade.

“The agency estimates that the two bills together would cost about $32 billion more in 2019 than H.R. 3962 (the overall bill) alone, and that the combination of the two bills would increase the budget deficit in 2019 by $23 billion relative to current law,” Elmendorf wrote.  “Those increments would grow during the following decade.”
Ryan, speaking on the floor of the House, said approving the two bills together “breaks the president’s pledge and promise on how health-care reform would be conducted.” 
Majority Leader Harry Reid's office, meanwhile, told that it would provide information on whether the Senate “doc fix” would be the same as the House version, and whether it would increase the budget deficit over the next decade, but had not done so by press time.
Last week, however, Reid did indicate that any rate increase the Senate passed would be offset by new revenue.
“Anything we do for the doctors is going to be paid for,” he told Nevada News Bureau. “We disagree with the House.” 

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