Senate Approves Bill To Block Scheduled Cut to Medicare Physician Pay

On Thursday, the Senate approved a plan to delay a scheduled 23% cut to Medicare physician payment rates until Jan. 1, 2011, Politico reports.

The measure includes a 2.2% payment increase to Medicare physicians (Haberkorn, Politico, 11/18).

Deferring the cuts from Dec. 1 to Jan. 1 is estimated to cost about $1 billion, which will be fully offset through cuts to Medicare reimbursements for certain outpatient therapy services, according to the Los Angeles Times (Levey, Los Angeles Times, 11/18).

The bill (HR 5712) was approved unanimously, after leaders of the Senate Finance Committee reached a bipartisan agreement earlier in the day (Norman/Ethridge, CQ Today, 11/18). According to Politico, the cost-offset was a key condition to secure GOP approval (Politico, 11/18).

Committee Chair Max Baucus (D-Mont.) and Sen. Chuck Grassley (R-Iowa), the panel's ranking member, said they plan to work on a longer-term fix to the payment rates issue before the year's end (Los Angeles Times, 11/18).

The newly approved measure now moves on to the House, where members are expected to grant full approval when they return from the Thanksgiving recess on Nov. 29, CQ Today reports (CQ Today, 11/18).

SGR Formula and Cost of 'Patches' Remain Key Issues

Although lawmakers often have reiterated that they want to delay reductions to the payment rate for longer periods of time, they usually face challenges reaching agreements to pay for the fixes, CQ Today reports (CQ Today, 11/18).

The current payment formula -- known as the sustainable growth rate formula -- was approved in 1997 and originally intended to lower costs by annually resetting physician payment rates (California Healthline, 5/4). When the cuts are deferred, they accumulate and force lawmakers to seek "patches."

Physician groups and seniors advocates have urged Congress to work on a longer 13-month fix that would block the payment rate cuts through the end of 2011. A permanent end to the payment rates issue could cost hundreds of billions of dollars (Los Angeles Times, 11/18).

Baucus has suggested that a year-long payment rate cut -- which the Obama administration has endorsed -- could be included as part of a more comprehensive tax restructuring package, which is likely to surface during a bipartisan congressional meeting with President Obama on Nov. 30 (CQ Today, 11/18).