What Debt Ceiling Deal Could Mean for Physicians

August 1, 2011
Aubrey Westgate

President Obama and congressional leaders announced an agreement Sunday night to avert financial default. While this is good news to the majority of the nation, it may not be the best compromise to physicians who see Medicare patients.

President Obama and congressional leaders announced an agreement Sunday night to avert financial default. While this is good news to the majority of the nation, it may not be the best compromise to physicians who see Medicare patients.

The proposed deal, which the House and Senate are expected to vote on by end of day today (August, 1) calls for spending cuts in two stages.

Stage one would call for immediate spending cuts of almost $1 trillion over a decade.

Stage two is most relevant to physicians. A specially-appointed 12-member Congressional committee would be charged with coming up with a recommendation for $1.5 trillion in deficit reductions by the end of November.

Those recommendations, which could include cuts to Medicare and Medicaid, would be put to a Congressional vote before the end of the year.

There is a catch (dubbed "the trigger mechanism"). If the committee does not reach an agreement or if its recommendations are rejected by the house or senate, automatic cuts of $1.2 trillion would be applied in across-the-board spending. These cuts would go into effect in 2013.

“To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act,” Obama said during a press conference Sunday night.

Medicaid would be exempt from these cuts. However, Medicare cuts would be on the table. These cuts would take the form of reduced payments to physicians and insurance companies, not to Medicare beneficiary programs.

Essentially, providers would bear the brunt of the Medicare cuts. And let's not forget that there is a 30% cut looming as of Jan. 1, 2012 thanks to the sustainable growth rate (SGR) formula for physician reimbursements in the Medicare program. Congress delayed acting on that until this December.

“Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they're still around for future generations,” Obama said.

Stay tuned to Physicians Practice for the latest on this developing story.