Growing Push to Eliminate Annual Medicare Reimbursement Cuts

December 7, 2013
David Doyle

Medicare physician reimbursements will be slashed by 24.4 percent on January 1. However, a new push on Capitol Hill could put a stop to it.

Medicare physicians could receive another pay cut on January 1, 2014. CNN Money reports that, barring congressional intervention, Medicare physician reimbursements will be slashed by 24.4 percent.

Due to the Medicare Sustainable Growth Rate (SGR), similar reductions are scheduled annually, although Congress often steps in to stop the cuts. However, there is a new push happening on Capitol Hill to put a stop to such reductions.

The Balanced Budget Act of 1997 introduced the Medicare SGR to rein in Medicare spending on physician services. Ever since then, the Medicare Payment Advisory Commission has worked with Congress to keep the annual increase in per-patient Medicare costs from exceeding the growth in the nation’s gross domestic product. If actual expenses exceed predicted expenses in a given year, then cuts to Medicare payments will be made the following year.

However, Congress often implements a one-year “doc fix” to override proposed decreases in the reimbursement rates. But this is a discussion that members of Congress must have at the end of every year.

Recently, physician groups (including the AMA) have lobbied for a “permanent doc fix” with the hope that reimbursement rates will be stabilized and physicians won’t have to stop treating Medicare patients in the future.

On October 31, The Washington Post reported that the Senate Finance and the House Ways and Means committees had agreed on a framework that would end the annual “doc fix” debate by repealing the SGR formula entirely.

The discussion draft outline aims to de-emphasize the volume of treatments provided and disperse Medicare payments based on the quality of care instead. In the short term, physician payment rates would be held at their current levels for 10 years while a new payment model is developed. Additionally, beginning in 2017, doctors could be eligible for performance-based financial incentives for completing activities such as increasing the use of EHRs or the availability of same-day appointments in their practices.

On November 21, Senate Finance Committee Chairman Max Baucus (D, Mont.) announced that his committee would discuss a permanent “doc fix” proposal during an open executive session on December 12. Although a repeal of the SGR formula appears to be gaining bipartisan support, Congress must still figure out a way to pay for these changes without raising the national deficit.

Sen. Jay Rockefeller (D, WV), chairman of the Senate Finance Committee’s Health Care Subcommittee, and Sen. Angus King (I, Maine) proposed a possible solution in a recent press release. In order to replace funds lost from the removal of the SGR formula, they suggest that “The Medicare Drug Savings Act is a sensible way to pay for replacing the SGR. It would return drug pricing for the dual eligibles to the same mechanism that was used prior to the passage of Part D and still for the Medicaid program, a mechanism that would not harm patients, doctors or hospitals in any way.”

Instead, the financial burden would be passed on to the pharmaceutical companies. The Center for Medicare Advocacy and the Medicare Rights Center support the senators’ plan, while, not surprisingly, the Pharmaceutical Research and Manufacturers of America oppose it.

Keep an eye on how this debate plays out in December. If Congress cannot reach an agreement on a permanent “doc fix,” then it might once again approve a one-year fix to prevent Medicare reimbursement cuts. But if no agreement is reached, you should familiarize yourself with the proposed reimbursement rates for next year. It might not be financially feasible for your practice to continue seeing Medicare patients in 2014.