Physician pay cuts averted, temporarily

Congress drew criticism for yet again delaying rather than eliminating a steep pay cut that is a perennial thorn in physicians’ side. Both the Senate and the House passed a bill that puts off a 26.5 percent cut in Medicare physician payments, but it extends only through the end of 2013.

The American Taxpayer Relief Act, which cleared the Senate on an 89-8 vote and then the House on a 257-167 vote, included a provision that averts a reduction in pay for physicians as part of the sustainable growth rate (SGR) formula until 2014. Congress has overridden the SGR, which under the 1997 Balanced Budget Act has been used to calculate Medicare Physician Fee Schedule payments, annually since 2003.

The American Taxpayer Relief Act also postponed automatic spending cuts, known as the sequester, for two months.

“Without action to permanently repeal the sustainable growth rate formula, Congress will replay this fiscally irresponsible scenario again and again, with even larger cuts awaiting practices in the near future,” Susan L. Turney, MD, president and CEO of the Medical Group Management Association-American College of Medical Practice Executives, said in a release. “Physician practices need a stable, predictable Medicare payment system to allow them to make sound, long-term decisions to invest in their practices, position themselves for the future and provide the highest quality care to the Medicare patients they serve.”

The American College of Cardiology (ACC) had encouraged Congress in late 2012 to repeal the SGR. “The combination of a sequestration and SGR payment cut would impede improvements to our healthcare system and lead to serious access to care issues for Medicare patients as well as employment reductions in medical practices,” ACC President William Zoghbi, MD, said in a release in December.

The White House said that the so-called “doc fix” was achieved without cuts to the Patient Protection and Affordable Care Act of 2010. The cost of the temporary patch will be offset by other provisions that affect providers, including:

  • Changes in payment for certain radiology services under the Medicare hospital outpatient prospective payment system;
  • Adjustments to the equipment utilization rate for advanced imaging services;
  • Payment adjustments for some diabetic and end stage renal disease services and supplies;
  • Increasing the window for recovering Medicare overpayments by two years; and
  • Eliminating all payments to the Medicare Improvement Fund.

Rich Umbdenstock, president and CEO of the American Hospital Association, voiced concern over the approach, arguing that additional payment reductions will impede patients’ access to care. “While fixing the physician payment formula is essential, it should not be done by jeopardizing hospitals’ ability to care for seniors and their communities,” he said in a release.

The centerpiece of the American Taxpayer Relief Act is legislation that permanently extends income tax cuts to the middle class while returning the tax rate for singles with incomes above $400,000 and married couples with incomes above $450,000 to 39.6 percent. President Barack Obama is expected to sign the bill soon.